Customer-specific testing charges on marketable goods were excluded from assessable value, and extended limitation failed for departmental awareness.

Customer-specific special or type test charges on transformers, undertaken after manufacture at the purchaser's request, were treated as post-manufacturing expenses with no nexus to manufacturing cost and therefore excluded from assessable value. The demand was also held largely time-barred because the department had knowledge of the practice and suppression could not be sustained for extended limitation. The operative principle stated is that testing charges for marketable goods are not part of wholesale cash price when they arise only from particular contracts, and extended limitation is unavailable where the practice was already known to the department.

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Issues: (i) Whether charges collected for special or type tests carried out on transformers at the instance of customers were includible in the assessable value; (ii) whether the demand was barred by limitation on the ground that the department was already aware of the practice and there was no suppression.

Issue (i): Whether charges collected for special or type tests carried out on transformers at the instance of customers were includible in the assessable value.

Analysis: The goods were found to be marketable even without the special or type tests, and such tests were undertaken only in respect of particular contracts at the request of customers. The charges were therefore in the nature of post-manufacturing expenses and had no nexus with the manufacturing cost of the goods. Following the earlier Tribunal view applied to similar facts, such customer-specific testing charges could not be treated as part of the wholesale cash price or assessable value.

Conclusion: The charges for special or type tests were not includible in the assessable value, in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation on the ground that the department was already aware of the practice and there was no suppression.

Analysis: The record showed departmental awareness of the collection of testing charges from an earlier stage, and the practice had already been the subject of adjudication. In these circumstances, suppression of facts could not be sustained for the extended period. Consequently, the demand beyond the permissible period was barred, and only a narrow part of the demand could have survived on limitation grounds, though that became academic in view of the decision on merits.

Conclusion: The demand was barred by limitation for the major part of the period, in favour of the assessee.

Final Conclusion: The appeal succeeded because the special or type testing charges were held to be outside the assessable value and the larger demand was also found to be time-barred.

Ratio Decidendi: Customer-specific testing charges incurred after manufacture on marketable goods, having no nexus with the manufacturing process, are not includible in assessable value; where the department is aware of the practice, extended limitation based on suppression is unavailable.

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