Assessable value and extended limitation require proof of nexus and proper particulars before additional duty or penalty can stand.

Additional consideration for drawings, designs, tooling, jigs and fixtures could be added to the assessable value of machines only where a direct nexus with the price of each clearance was established, and any such amount had to be amortised clearance-wise because each clearance was a separate assessment. In the absence of the subsequent purchase orders and any finding that their prices were depressed by those supplies, the entire amount could not be loaded into value. The extended limitation period and penalty also failed because the notice contained only vague allegations and lacked adequate particulars of misdeclaration or concealment. The demand and penalty were set aside.

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Issues: (i) Whether the amount received towards drawing, design, tooling, jigs and fixtures had to be included in the assessable value of the machines cleared under subsequent orders; (ii) Whether the extended period of limitation and penalty were invocable.

Issue (i): Whether the amount received towards drawing, design, tooling, jigs and fixtures had to be included in the assessable value of the machines cleared under subsequent orders.

Analysis: The consideration for drawings, designs, tooling, jigs and fixtures could be loaded into the value of the machines only if a nexus was established between that consideration and the negotiated price of the goods cleared under each separate order. The value, if includible, had to be amortized and added clearance-wise, because each clearance was a separate assessment. In the absence of the subsequent purchase orders and any finding that the prices in those orders were depressed because of the supplied drawings and tooling, the entire amount could not be straightaway added to the assessable value.

Conclusion: The inclusion of the entire amount in the assessable value was not sustainable against the assessee.

Issue (ii): Whether the extended period of limitation and penalty were invocable.

Analysis: The show cause notice did not contain adequate allegations showing misdeclaration of the individual contracts or sufficient particulars to justify invocation of the extended limitation period. Mere general assertions that the development charges were not disclosed were held inadequate to support the proviso to the demand provision. On the same footing, the penal provision could not be applied in the absence of proper material.

Conclusion: The extended period of limitation and the penalty were not invocable against the assessee.

Final Conclusion: The demand and penalty were set aside, and the appeal succeeded in full.

Ratio Decidendi: Additional consideration can be added to assessable value only on proof of a direct nexus with the clearances and after clearance-wise amortisation, and extended limitation or penalty cannot be sustained on vague allegations without adequate supporting particulars.

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