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Issues: Whether the extended period of limitation and the consequential demand, penalty, and interest were sustainable where the assessee did not include the amortisation value of moulds and dies supplied free of cost in the assessable value of motorcycle components.
Analysis: The assessee had received moulds and dies free of cost, treated them as capital goods, and availed Modvat credit, but did not factor their amortisation value into the assessable value of the components manufactured. The Tribunal found that the legal position requiring inclusion of amortisation value had been clear from 1995 and that the assessee nevertheless continued to exclude it. The Tribunal held that the omission was not a bona fide dispute on valuation, but conduct contrary to the settled legal position, and therefore amounted to suppression with intent to evade duty. On that basis, invocation of the extended period of limitation was upheld, and the penalty and interest based on the confirmed demand were not disturbed.
Conclusion: The extended period of limitation was correctly invoked, and the demand, penalty, and interest were upheld against the assessee.
Ratio Decidendi: Where an assessee knowingly omits a legally includible element from assessable value despite a settled legal position, such omission constitutes suppression with intent to evade duty and justifies invocation of the extended period.
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