Limitation and assessable value principles confined excise demand to the statutory period and excluded site-related charges.

Where the larger limitation period was not invoked, excise duty demand was confined to the normal statutory period: the notice entirely beyond six months was time-barred, and in the second notice only the invoices within six months survived. On valuation, erection, commissioning and testing charges were excluded from assessable value because the goods were manufactured in the factory, dismantled for transport, and re-erected at site. No substantive challenge was advanced on design and engineering charges. The demand was therefore sustainable only to the limited extent falling within limitation, with the remainder set aside.

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Issues: (i) whether the duty demand under the show cause notices was barred by limitation in whole or in part; (ii) whether charges for erection, commissioning, testing, design and engineering were includible in the assessable value of the excisable goods.

Issue (i): whether the duty demand under the show cause notices was barred by limitation in whole or in part.

Analysis: The larger period of limitation was not invoked. The notice covering a period entirely beyond six months was time-barred. In the second notice, the demand relating to invoices falling outside the six-month period was barred, while the demand relating to invoices within the six-month period survived.

Conclusion: The demand was barred by limitation to the extent found time-barred, and was sustainable only for the portion falling within the limitation period.

Issue (ii): whether charges for erection, commissioning, testing, design and engineering were includible in the assessable value of the excisable goods.

Analysis: No substantive challenge was advanced on the inclusion of design and engineering charges. As to erection, commissioning and testing charges, the goods were manufactured in the factory, dismantled for transport and re-erected at site; such site-related charges were not part of the assessable value.

Conclusion: Charges for erection, commissioning and testing were not includible in the assessable value, and the demand on that basis was unsustainable.

Final Conclusion: The duty demand was upheld only for the limited amount attributable to the invoices found within time, and the remainder of the demand was set aside.

Ratio Decidendi: Where the larger period of limitation is not invoked, excise demand is confined to the statutory limitation period, and site-related erection, commissioning and testing charges are not includible in assessable value when the goods are manufactured in the factory and subsequently re-erected at site.

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