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Issues: Whether the block and stereo charges collected by debit notes were includible in the assessable value of the plastic bags, sheets and films cleared by the assessee, and whether the penalty and interest imposed were sustainable.
Analysis: The charges were collected from buyers in addition to the invoice value and were not disclosed to the department in the required declaration. Following prior Tribunal authority on inclusion of the cost of patterns, moulds and similar items supplied at the buyer's instance, the cost recovered as block and stereo charges was held to form part of the assessable value. The levy of interest was upheld because the statutory provision for interest had already come into force. On penalty, the equal amount imposed under Section 11AC was found excessive in the facts and was reduced, while the separate penalty under Rule 173Q was left undisturbed.
Conclusion: The charges were correctly added to the assessable value and interest remained payable, but the mandatory penalty under Section 11AC was reduced to Rs. 10,000, resulting in only partial relief to the assessee.
Ratio Decidendi: Amounts recovered from buyers towards the cost of block and stereo work, when linked to manufacture and not disclosed in the declared price, form part of the assessable value; statutory interest is payable once the charging provision is in force, while mandatory penalty may be moderated on the facts.
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