Free-supplied mould valuation must follow amortised cost principles, with fresh duty recomputation and revised penalty quantification.

Free-supplied moulds and dies are includible in the assessable value of moulded goods on an amortised basis, but the amortisation must be worked out with reference to the mould's expected life and capability and in line with binding valuation guidelines. The adjudicating authority's valuation was found incomplete because it did not properly consider admissible Cost Accountant certificates for several moulds, so the duty demand based on that valuation was set aside to that extent for fresh determination. The extended limitation period was upheld because the assessee did not disclose the free-supplied moulds and dies in its declaration. Interest followed from suppression, while penalty was kept for fresh quantification after recomputation of duty.

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Issues: (i) whether the amortised value of moulds and dies supplied free of cost by customers was correctly worked out for inclusion in the assessable value of the moulded goods; (ii) whether the demand of duty was barred by limitation; and (iii) whether interest and penalty followed from the confirmed demand.

Issue (i): whether the amortised value of moulds and dies supplied free of cost by customers was correctly worked out for inclusion in the assessable value of the moulded goods

Analysis: The value of moulds and dies supplied free of cost by the buyer is includible in the assessable value on an amortised basis. For amortisation, the relevant factors are the expected life of the mould and its capability, and the Board's circular permits reliance on a Cost Accountant's certificate. The adjudicating authority did not properly consider the Cost Accountant's certificates for several moulds and proceeded on an incomplete basis for estimating amortised value. The overseas surveyor reports on life expectancy were not treated as conclusive, but the existing determination required interference where it was not in conformity with the binding valuation guidelines.

Conclusion: The amortisation was incorrect in respect of the disputed moulds, and the demand based on that valuation was set aside to that extent with a direction for fresh determination.

Issue (ii): whether the demand of duty was barred by limitation

Analysis: The assessee had received additional consideration in the form of free-supplied moulds and dies, but did not file a fresh declaration or disclose that fact in the original declaration. The plea of bona fide belief was rejected because the valuation provisions were clear and the relevant Tribunal decision had already removed doubt. The fact that the customers could avail Modvat credit did not negate the allegation of suppression against the assessee.

Conclusion: The extended period of limitation was rightly invoked and the demand was not time-barred.

Issue (iii): whether interest and penalty followed from the confirmed demand

Analysis: Once suppression with intent to evade duty was found, interest on the duty evaded and penalty were attracted. However, because part of the duty demand was set aside and required requantification, the penalty also required fresh determination on the revised duty figure.

Conclusion: Interest was upheld, and the penalty was set aside for fresh quantification after recomputation of duty.

Final Conclusion: The dispute on valuation succeeded partly for the assessee, the limitation objection failed, and the matter was sent back for fresh quantification of duty and consequential penalty on the disputed moulds.

Ratio Decidendi: Where free-supplied moulds and dies are included in assessable value, their proportionate cost must be determined by amortisation with reference to expected life and capability, and the adjudicating authority must consider admissible Cost Accountant evidence while applying the binding valuation guidelines.

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