ORDER
Gowri Shankar, Member (T)
1. The appeal is against the order of the Commissioner confirming the demand issued to the appellant proposing to include, in the assessable value of the glass product that it manufactured, the cost of the moulds for making such bottles which were supplied free to its customers and the charges that it incurred for maintaining these moulds, imposing penalty on the appellant.
2. The Counsel for the appellant accepts that, these costs are includible in the assessable value, following the decision of the Larger Bench of the Tribunal in Mutual Industries Ltd. v. CCE – 2000 (117) E.L.T. 578. He contends however that the extended period of limitation invoked in the notice dated 22-4-1993 for clearances made between February, 1988 to January, 1993, alleging suppression would not be available. The notice alleged that the appellant had wrongfully stated in its price list that no consideration other than the price was flowing to it from the buyer of the goods direct or indirect.
3. Counsel for the appellant accepts that the fact of supply of goods free of cost would amount to indirect consideration. He says however that mere wrong statement with regard to the facts is not sufficient to invoke extended period. Such a statement is shown to be an intent to evade duty. Where such intent is not present, the extended period cannot be invoked solely on the ground that the statement made by the assessee is incorrect. He cites the judgments of the Supreme Court in Pushpam Pharmaceutical Company v. CCE – 1995 (78) E.L.T. 401 and Tamil Nadu Housing Board v. CCE – 1994 (74) E.L.T. 9. At the relevant time, there was no decision or judgment of any Court or Tribunal holding as includable the cost of moulds in the assessable value of the finished goods for the manufacture of moulds which were employed. The issue first came to the attention of the Tribunal in 1997 when, by its decision in Flex Industries Ltd. v. CCE – 1997 (91) E.L.T. 120, the Tribunal held that such costs were includable. However another decision in CCE v. Marathwada Glass Co. Pvt. Ltd. – 1999 (85) ECR 94, held that these costs were not includable. A similar view had been taken in two other decisions in Creative Cartons v. CCE – 1999 (106) E.L.T. 79 and unreported decision in Whirlpool India Ltd. v. CCE (Appeal E/3033/2000). There being no case law on the subject, it was possible for the appellant to conclude that such costs were not includable. On the other hand, the judgment of the Allahabad High Court in Geep Industrial Synticate Ltd. v. UOI – 1982 (10) E.L.T. 857 holding that all the costs which the manufacturer incurred putting an article in marketable condition has to be included in the manufacturing cost, would lead the appellant to believe that the costs incurred by others are not includible.
4. The departmental representative emphasises that the appellant had deliberately not declared that these costs of the moulds were of consideration. He relies upon the decision of the Larger Bench of the Tribunal holding the view that such costs are includible.
5. As we have noted, the case is against the appellant on merits. What is now required to be considered is the applicability of the extended period of limitation. It is no doubt true that the appellant had declared that no additional consideration was flowing to it from the buyer. The ratio of the judgment of the Supreme Court cited by the appellant for the proposition that unless there is a positive act by the manufacturer justifying the applicability of any of the circumstances specified in the proviso under Sub-section (1) of Section 11A of the Act, the extended period will apply. There is nothing to show that the appellant, despite knowing or having reason to believe that these costs were includable, yet stated that they were not, Having regard to the fact that the state of law was unsettled, it was possible for the appellant to come to the conclusion that it did. We are therefore of the view that the facts of the case will not justify applicability of extended period. The demand for the extended period therefore will not apply. The appeal however fails with regard to duty claims within the normal period of limitation.
6. The appeal is accordingly allowed in part. The demand for duty for the extended period of limitation is set aside, as is the penalty on the appellant. The Assistant Commissioner shall determine and communicate the duty payable with regard to the duty within the normal period.