TMI Blog2000 (3) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... used by the manufacturers of Automobiles, TV sets, photocopying machines etc. Till 1986, these articles of plastics were wholly exempted from excise duty. They became leviable to tax with effect from March, 1986. Buyers of goods manufactured by the appellant could avail of Modvat credit of the duty paid on these components. It is the case of the appellant that the plastic components manufactured by them are tailormade for end-users which are to be used as original equipment parts in their finished goods. Accordingly they have to be made in accordance with purchasers specifications and drawings. For manufacturing these moulded components, appellants required moulds and dies. Some of the moulds and dies manufactured by the appellant were sold to the customers on payment of duty. Sometimes customers supplied moulds free of charge to the appellant for manufacture of the components. By using those moulds supplied by the customers appellant manufactured components. Components so manufactured by using the moulds were sold to the buyers by filing price list under Part II. On 25-10-1991, a show cause notice was issued by the Commissioner of Central Excise stating that appellants had not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed. Overruling that objection differential duty was claimed. So the question whether price collected for cylinders can be included in the assessable value of the finished product came up before this Tribunal. This Tribunal referred to a Circular No. 17/4196-CX (sic), dated 23-1-1996, wherein the Central Board clarified the matter as under : "The matter has been clarified and it is hereby clarified that the proportionate cost of pattern has to be included in the assessable value of the casting even in cases where such patterns are being supplied by the buyers of the casting or are got prepared/manufactured by the job worker at the cost of the buyer. In cases where there is difficulty in apportioning the cost of pattern, apportionment can be made depending on the expected life and capability of the pattern and the quantity of castings that can be manufactured from it and thus working the cost to be apportioned per unit. For this purpose, a certificate from a Cost Accountant may be accepted." This Tribunal took the view that the principle contained in the above clarification would apply to apportionment of cost of cylinder used in the manufacture of printed pouches. The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng into consideration the availability of the mould as well. Had not these moulds been made available by the customers, the appellant could not have manufactured moulded components as required by the customer. So the value of the mould must go in in assessing the value of the finished product. It was only by taking into consideration the value of the mould, the value of the moulded components manufactured by the appellant was fixed. If the moulds were not supplied by the customers, the value of finished product would have been far greater than the amount fixed between the appellant and the customer. 7.Section 4 of the Central Excises and Salt Act, 1944 provides for finding out the value of excisable goods for purposes of charging of duty of excise. As per Section 4(1)(a) the value for charging of duty of excise should be the normal price, if the price is the sole consideration for the sale. Further, Rule 5 of Central Excise (Valuation) Rules, 1975 stipulates that where the price is not the sole consideration, the value of the goods shall be based on the aggregate of such price and the amount of the money value of any additional consideration flowing directly or indirectly from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned. This means that so long as the mould is in use in the manufacture of the finished product, it contributes certain value to be added to the value of the finished product. That additional value must necessarily go in assessing the duty payable on the finished product under the excise law. 9.Yet another argument that was advanced by the learned Counsel representing the appellant was that in the accounting system capital goods must be given depreciation year after year. If the capital goods, namely, the mould is having a depreciation of 20% per year, after the fifth year its book value will become zero. Once the value thus becomes zero, it must be treated as valueless and it cannot go to increase the value of the finished product. This ingenious argument of learned Counsel cannot also be accepted. Where the mould is given by the customer it continues to be property of the customer. As far as he is concerned he may be getting benefit of the depreciation. By virtue of this benefit he may be getting other tax benefits, not under the excise law. Whatever be the benefit that is accruing to the customer who supplied the mould, free of cost, to the manufacturer is not of any conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude mould cost in the declared value of the manufactured moulded article of plastic ......" Subsequent notice, stated therein, is no ground to invoke extended period of five years provided by the Act. When the entire document and materials were available with the Department, it was the duty of the Department to scrutinise the terms and conditions therein and to come to its conclusion. It cannot sleep over the matter and come forward with a statement that it was noticed only subsequently. Since the entire contract was with the Department, we hold that the manufacturer did not suppress or conceal any fact for the purpose of evading payment of duty. No transaction mentioned in the show cause notice falls within six months immediately preceding the date of notice. The period was from 1-10-1986 to 31-8-1990. The show cause notice was dated 25-10-1991 that is, more than one year after the period mentioned in the notice. The show cause notice is clearly barred by limitation. The demand made in the show cause notice is not legally sustainable. Therefore, we hold that the proceedings initiated against the appellant pursuant to show cause notice dated 25-10-1991 is clearly barred by limitat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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