Composite sale consideration and disclosure obligations determine invoice-price exemption and extended limitation under excise law.

Under Notification No. 120/75-C.E., mounting charges separately shown in a composite sales contract were held includible in the invoice price where they formed part of the total sale consideration and were not shown to be independent of the price charged for sale. On limitation, the extended period under Section 11A was upheld because the assessee had not disclosed the collection of mounting charges to the department when exemption was claimed, and the later discovery supported suppression for limitation purposes. The demand and penalty were sustained.

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Issues: (i) Whether the mounting charges formed part of the invoice price for the purpose of Notification No. 120/75-C.E. and were therefore includible while computing duty; (ii) whether the demand was barred by limitation or the extended period under Section 11A was rightly invoked.

Issue (i): Whether the mounting charges formed part of the invoice price for the purpose of Notification No. 120/75-C.E. and were therefore includible while computing duty.

Analysis: The contract disclosed a composite price for the goods, with mounting charges separately shown but described as part of the total price. The majority held that, on the facts, the amount of Rs. 40 per unit was being collected as part of the composite bargain and was not a post-clearance charge outside the invoice value. The notification permitted exemption on the basis of invoice price after excluding only duty and local taxes, and the assessee had not shown that the amount charged towards mounting stood outside the price charged for sale.

Conclusion: The mounting charges were includible in the invoice price, and the issue was decided against the assessee.

Issue (ii): Whether the demand was barred by limitation or the extended period under Section 11A was rightly invoked.

Analysis: The majority found no material showing that the assessee had disclosed the collection of mounting charges to the department when the exemption was availed. On the record, the department came to know of the arrangement only later, and the omission to disclose the true nature of the charging pattern justified the allegation of suppression for the purpose of limitation.

Conclusion: The extended period was validly invoked, and the issue was decided against the assessee.

Final Conclusion: The appeals failed on merits and on limitation, and the demand and penalty were sustained.

Ratio Decidendi: Where a manufacturer opts for an invoice-price exemption and the contract price includes a separately stated component that is part of the composite sale consideration, that component forms part of the invoice price unless it is shown to be truly independent of the price charged for the sale; non-disclosure of such a component to the department can justify invocation of the extended limitation period.

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