Commercially distinct transformers are separately excisable; extended limitation fails without fraud or suppression, and set-off may survive procedural lapses.

Transformers assembled from duty-paid components were treated as commercially distinct finished goods and therefore separately excisable; the plea against duty on the ground of double taxation was rejected. Extended limitation was not available because the notice lacked allegations of fraud, suppression, or similar intent-based default, so the demand was confined to the normal period and penalty was set aside. Exemption under Notification No. 57/75 was not established, Notification No. 118/75 was held inapplicable, and set-off under Notification No. 201/79 was allowed to the extent supported by the evidence, with recomputation directed accordingly.

---

---

Issues: (i) whether transformers assembled from duty-paid components were distinct excisable goods; (ii) whether the demand could be sustained for the extended period and whether penalty was warranted; (iii) whether the assessee was entitled to exemption under Notification No. 57/75, benefit of Notification No. 118/75, and set-off under Notification No. 201/79.

Issue (i): whether transformers assembled from duty-paid components were distinct excisable goods.

Analysis: The components and the finished transformers were commercially different articles with different functions and uses. A transformer brought into existence from those components was a separate manufactured product and was not the same commodity on which duty had already been paid. The plea of double taxation was therefore not accepted.

Conclusion: The transformers were held to be excisable goods, and this issue was decided against the assessee.

Issue (ii): whether the demand could be sustained for the extended period and whether penalty was warranted.

Analysis: The notice did not contain allegations of fraud, suppression, misstatement, or similar intent-based defaults necessary to invoke the larger period. On the facts, no sufficient basis was found to infer deliberate evasion merely because no licence had been taken for the transformers, especially when the assessee paid the duty soon after notice and appeared to have acted under a bona fide belief. In that view, penalty was also not justified.

Conclusion: The demand was confined to the normal period of limitation, and the penalty was set aside in favour of the assessee.

Issue (iii): whether the assessee was entitled to exemption under Notification No. 57/75, benefit of Notification No. 118/75, and set-off under Notification No. 201/79.

Analysis: The claim under Notification No. 57/75 was not established on the material before the Tribunal. Notification No. 118/75 was inapplicable because the transformers were not intended for use in the same factory or another factory of the assessee. As to Notification No. 201/79, the duty-paid inputs were used in manufacture and the Department relied on the assessee's own records; the procedural lapse was not treated as decisive where the assessee had acted under a bona fide impression that duty was not payable.

Conclusion: Relief under Notification No. 118/75 was rejected, while set-off under Notification No. 201/79 was directed to be allowed to the extent permissible on evidence.

Final Conclusion: The excisability of the transformers was affirmed, but the demand was restricted to the normal limitation period, the penalty was cancelled, and the matter was remitted for recomputation after granting admissible set-off benefits.

Ratio Decidendi: A finished article that is commercially distinct from its components is separately excisable; extended limitation requires specific allegations and supporting basis of fraud or suppression; and procedural non-compliance may not defeat a set-off claim where the underlying duty-paid inputs and their use are otherwise established.

---