Assessable value includes fitted components before clearance; non-accounted stock is confiscable, and suppression defeats limitation.

Goods manufactured but not entered in statutory records were treated as non-accountal and liable to confiscation under the Central Excise Rules, 1944, and the challenge to confiscation failed. The value of bulbs fitted in headlights before clearance was includible in assessable value because the headlights were cleared as complete goods and the bulbs formed an integral part of the final product; the related duty demand was sustained. No statutory authority was shown for appropriating credit after reversal of an allegedly irregular credit entry, so that direction was set aside. The demand on bulb value was not time-barred because the non-declaration and claimed free supply were treated as suppression and wilful misstatement, making the extended period available.

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Issues: (i) Whether excess excisable goods found in the factory were liable to confiscation for non-accountal under the Central Excise Rules, 1944; (ii) whether the value of bulbs supplied free of cost and fitted in the headlights before clearance was includible in the assessable value; (iii) whether the amount of credit allegedly irregularly taken could be appropriated after reversal; and (iv) whether the demand relating to bulb value was barred by limitation.

Issue (i): Whether excess excisable goods found in the factory were liable to confiscation for non-accountal under the Central Excise Rules, 1944

Analysis: The excess stock was found during surprise inspection and the explanation that the goods had not been entered in the statutory register was not substantiated by contemporaneous material. The goods were manufactured but not accounted for, bringing the case within the provision dealing with non-accountal of excisable goods, rather than mere removal in contravention of the rules.

Conclusion: The confiscation was upheld and the challenge to this part failed.

Issue (ii): Whether the value of bulbs supplied free of cost and fitted in the headlights before clearance was includible in the assessable value

Analysis: The evidence showed that the headlights were cleared with bulbs fitted. The article marketed and cleared as a headlight was incomplete without a bulb, and the bulbs formed an integral part of the final goods. Even on the footing that the bulbs were accessories, their value was required to be added because they were fitted before clearance. The buyer's arrangement for free supply of bulbs was not shown to govern the bulk of the relevant period.

Conclusion: The value of the bulbs was rightly included in the assessable value and the demand on this count was sustained.

Issue (iii): Whether the amount of credit allegedly irregularly taken could be appropriated after reversal

Analysis: No provision under the Central Excise Act, 1944 or the Central Excise Rules, 1944 was shown to authorize appropriation of credit irregularly taken. Separate penalty had already been imposed, and once the credit entry had been reversed, further appropriation was unsustainable.

Conclusion: The order directing appropriation of the credit could not stand and was set aside.

Issue (iv): Whether the demand relating to bulb value was barred by limitation

Analysis: The record did not establish that the relevant price lists and contracts for the entire period disclosed free supply of bulbs by the buyer. The non-declaration of bulb value and the claim of free supply were treated as suppression and wilful mis-statement made with intent to evade duty, so the extended period was available.

Conclusion: The demand was not time-barred.

Final Conclusion: The appeal succeeded only to the limited extent of the direction regarding appropriation of irregular credit, while the remaining findings and demands were maintained.

Ratio Decidendi: Goods manufactured and not accounted for are liable to confiscation under the rule governing non-accountal, and where no statutory authority exists, an amount of credit cannot be appropriated after reversal; further, the value of components fitted before clearance forms part of the assessable value and suppression defeats the plea of limitation.

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