2000 (8) TMI 634 - AT - Central Excise

Summary

Issues:
1. Inclusion of free supplied items in the assessable value of the final product.
2. Whether the demand raised is barred by limitation.

Analysis:

1. Inclusion of free supplied items in the assessable value of the final product:
The case involved a dispute regarding the inclusion of CR sheets provided free of cost by a company in the value of fuel tanks manufactured by another company on job work basis. The Revenue contended that the value of the free supplied items had to be considered in determining the assessable value of the final product. The Tribunal referred to established legal principles, citing precedents such as Ujagar Prints v. U.O.I. and Burn Standard & Co. Ltd. v. U.O.I., which supported the inclusion of free supplied items in the assessable value. The Tribunal upheld the Revenue's position, emphasizing the necessity to include the value of such items in the final product's assessable value.

2. Limitation on the demand raised:
The appellant argued that the demand raised by the Revenue was barred by limitation. The appellant contended that they had declared both values - the value of tanks manufactured on their own behalf and on behalf of another company - in their price lists and purchase orders. The appellant claimed that since the purchase orders clearly stated that the sheets would be supplied by the other company, any demand raised after a period of six months from the relevant date should be considered time-barred. The Tribunal considered previous decisions, such as Bhartiya Indus. v. C.C.E., and Newton Engg. & Construction Co. (P) Ltd. v. C.C.E., which highlighted the importance of the bona fide belief of the assessee and the benefit of doubt in cases of past controversies. The Tribunal found merit in the appellant's argument, stating that the longer period of limitation could not be invoked due to the circumstances of the case. Ultimately, the Tribunal set aside the impugned order on the point of limitation and allowed the appeal in favor of the appellant.

In conclusion, the judgment by the Appellate Tribunal CEGAT, Kolkata addressed the issues of including free supplied items in the assessable value of the final product and the limitation on the demand raised. The Tribunal emphasized the legal requirement to consider the value of free supplied items in determining the assessable value, while also recognizing the appellant's argument regarding the limitation period and the bona fide belief held by the appellant. The decision favored the appellant, setting aside the order on the point of limitation and providing consequential relief.