Separate computer peripherals excluded from assessable value; absence of suppression also defeats extended limitation for the demand.

Separately supplied bought-out peripherals that are not integral parts of computers are not includible in the computers' assessable value, particularly where they are invoiced separately and merely add memory, storage, or utility. The note also states that amended show cause notices introducing new grounds and issued despite prior departmental knowledge of the supply arrangement cannot support the extended period where suppression is absent; on that basis, the time-bar defence succeeds. The stated effect is that the duty demand and the penalty founded on the disputed valuation and limitation grounds are not sustainable.

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Issues: (i) Whether the demands raised through the amended show cause notices were barred by limitation and unsupported by suppression so as to justify invocation of the extended period; (ii) whether the value of bought-out/imported peripherals supplied separately with computers was includible in the assessable value of the computers, and whether penalty could survive.

Issue (i): Whether the demands raised through the amended show cause notices were barred by limitation and unsupported by suppression so as to justify invocation of the extended period.

Analysis: The amended notices were treated as fresh notices introducing new grounds and altering the basis of the original allegations. The record also showed that the department had prior knowledge of the supply of peripherals through correspondence, revised classification materials, and approved plans. In those circumstances, the factual basis for alleging suppression was absent, and the longer period could not be invoked for the earlier clearances.

Conclusion: The demands covered by the notices and amendments beyond the normal period were time-barred, and invocation of the extended period was not sustainable.

Issue (ii): Whether the value of bought-out/imported peripherals supplied separately with computers was includible in the assessable value of the computers, and whether penalty could survive.

Analysis: The peripherals were supplied under separate invoices and were not manufactured in the factory as integral parts of the computers. The controlling principle applied was that bought-out peripheral devices which merely add to the memory, storage, or utility of the computer do not form part of the assessable value of the computer. On that basis, the valuation adopted by the department could not be sustained, and the penalty founded on the same demand also could not survive.

Conclusion: The value of the separately supplied peripherals was not includible in the assessable value of the computers, and the penalty was set aside.

Final Conclusion: The appeals succeeded in full, and the impugned duty demand and penalty were annulled.

Ratio Decidendi: Separately supplied bought-out peripherals that are not integral parts of the computer are not includible in the computer's assessable value, and absence of suppression bars invocation of the extended limitation period.

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