Assessable value and limitation in excise: customer-supplied pattern costs are includible, but disclosed facts defeat extended limitation.

Customer-supplied patterns used in manufacturing castings were treated as part of the assessable value because the finished goods could not be produced without the moulds or patterns. In limitation, disclosure of purchase order numbers in price lists, together with the underlying purchase orders showing pattern and tooling charges and the retention-return arrangement, meant the department had access to the relevant facts. On that basis, suppression of facts with intent to evade duty was not made out, so the extended period of limitation was unavailable and only the normal period could be applied.

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Issues: (i) Whether the cost of customer-supplied patterns was includible in the assessable value of the castings; (ii) whether the extended period of limitation could be invoked for demand of central excise duty.

Issue (i): Whether the cost of customer-supplied patterns was includible in the assessable value of the castings.

Analysis: The assessable value was required to include the value attributable to the use of the moulds/patterns, since the finished product could not be manufactured without them. The larger bench view relied upon by the Tribunal treated the cost attributable to patterns as part of the value of the finished castings.

Conclusion: Yes. The cost of the patterns was includible in the assessable value.

Issue (ii): Whether the extended period of limitation could be invoked for demand of central excise duty.

Analysis: The price lists disclosed the purchase order numbers and were accompanied by the purchase orders, which contained details of the pattern/tooling charges and the arrangement for retention and return of the tools. The demand itself was raised on scrutiny of those statutory documents. Where the department had access to the very documents relied upon for the demand, suppression of facts with intent to evade duty was not established, and the larger period under the limitation provision could not be applied.

Conclusion: No. The extended period was not invokable; only the demand within the normal period survived.

Final Conclusion: The duty demand was sustained only to the extent permissible within the normal limitation period, while the invocation of the extended period was rejected.

Ratio Decidendi: When the relevant facts are disclosed in statutory filings and the demand is founded on those very documents, suppression of facts or intent to evade duty cannot be inferred so as to justify the extended limitation period.

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