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Issues: Whether the amount received towards designs, drawings, tooling, jigs and fixtures could be added to the assessable value of the machinery cleared under separate orders, and whether duty and penalty could be sustained on that amount.
Analysis: The agreement was not confined to supply of designs or drawings in isolation, but formed part of a composite arrangement for design, manufacture and supply of machines under separate written orders. Even so, the additional consideration could be loaded onto the value of the cleared goods only if a nexus was established between that consideration and the negotiated price of the assessable machines. On the record, the written orders for the machines were not relied upon in the original proceedings and there was no clear finding that the amount of Rs. 43 lakhs formed part of the price of the machines actually cleared. In the absence of such a finding and adequate reasons to invoke the extended period, the demand and penalty could not be sustained.
Conclusion: The addition of the amount to assessable value was not justified on the facts found, and the demand of duty and penalty were unsustainable.
Ratio Decidendi: Charges for designs, drawings, tooling, jigs and fixtures can be included in the assessable value only when a clear nexus is shown between that consideration and the price of the excisable goods under clearance, and the extended period or penalty cannot be invoked on vague allegations without supporting findings.
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