Contractual testing charges were includible in assessable value, but disclosed contract terms barred extended limitation and penalty.

Contractual testing charges recovered from customers formed part of the assessable value of the supplied transmission tower line goods because the charges were recovered under the same contract and were disclosed in the contractual terms. On limitation, the extended period was unavailable since there was no suppression of the testing charges, and the department could not rely on that basis to reopen the demand beyond the normal period. The demand was therefore time barred, and the penalty could not survive once the demand failed on limitation.

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Issues: (i) whether testing charges recovered from customers formed part of the assessable value of transmission tower line goods; (ii) whether the demand was barred by limitation and the penalty sustainable.

Issue (i): whether testing charges recovered from customers formed part of the assessable value of transmission tower line goods.

Analysis: The Tribunal followed its earlier order in the assessee's own case, where charges recovered under the contract for testing were held to be part of the value of the goods supplied under that contract. The same contractual basis governed the present case, and the testing charges were disclosed in the contracts entered into by the assessee.

Conclusion: Testing charges formed part of the assessable value.

Issue (ii): whether the demand was barred by limitation and the penalty sustainable.

Analysis: The Tribunal held that there was no suppression of recovery of testing charges, since the contracts clearly mentioned such charges and the department could not invoke the extended period on that basis. As the demand had been issued beyond the normal period, it was time barred. The penalty could not survive once the demand was set aside on limitation.

Conclusion: The extended period was not available, the demand was time barred, and the penalty was set aside.

Final Conclusion: The assessment issue was decided against the assessee, but the demand and penalty failed on limitation, leaving the assessee substantially successful.

Ratio Decidendi: Where a contractual charge is recovered from the buyer in relation to the supplied goods, it forms part of assessable value, but the extended limitation period cannot be invoked in the absence of suppression when the charge is disclosed in the contract.

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