Free supplied bought-out goods are excluded from assessable value where they are distinct from the main product and not a multi-piece package.

Free supplied bought-out staple pins, being distinct goods from staplers and not forming a statutory multi-piece package, were not includible in the staplers' assessable value for MRP-based duty under Section 4A. The valuation circular relied on by the Revenue applied only to multi-packs of the same commodity capable of separate sale at the printed MRP, which was not the factual position. The text also states that the dispute involved a debatable interpretation of the valuation provisions and circular, so the ingredients for the extended period of limitation were not made out. The demand was therefore unsustainable on merits and limitation.

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Issues: (i) Whether the value of bought-out staple pins supplied free with staplers was includible in the assessable value of the staplers for MRP-based duty under Section 4A; (ii) whether the extended period of limitation was invocable.

Issue (i): Whether the value of bought-out staple pins supplied free with staplers was includible in the assessable value of the staplers for MRP-based duty under Section 4A.

Analysis: The staple pins were different goods from the staplers, were bought-out items, were not manufactured by the appellant, and were supplied free of cost. They were not packed as a single unit container with the staplers, nor did the facts satisfy the statutory concept of a multi-piece package under Rule 2(j) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The circular relied upon by the Revenue applied only to multi-packs of the same commodity capable of separate sale at the printed MRP, which was not the factual position here. The value of free bought-out items does not form part of the assessable value of the main product.

Conclusion: The value of the staple pins was not includible in the assessable value of the staplers, and this issue was decided in favour of the assessee.

Issue (ii): Whether the extended period of limitation was invocable.

Analysis: The dispute turned on valuation of free supplied bought-out goods and involved a debatable interpretation of the relevant valuation provisions and circular. In such circumstances, the ingredients for invoking the extended period were not established.

Conclusion: The extended period of limitation was not invocable, and this issue was decided in favour of the assessee.

Final Conclusion: The demand could not be sustained on merits or by resort to the extended limitation period, and the assessee succeeded in the appeal.

Ratio Decidendi: Free supplied bought-out goods that are distinct from the main product and do not constitute a statutory multi-piece package are not includible in the assessable value of the main product, and a debatable valuation issue does not justify invocation of the extended period of limitation.

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