K.L. Rekhi, Member (T)

1. The respondents manufactured concrete sleepers for exclusive supply to the Indian Railways. In the manufacture of such sleepers, an iron component called malleable cast iron insert was used. This component was supplied by the Railways to the respondents free of charge and consequently the respondents did not include its cost in the price of their sleepers. Three points of dispute have arisen in the present appeal for our consideration :

(1) the issue on merits - whether the cost of inserts should be included in the assessable value of sleepers under Section 4 of the Central Excises and Salt Act, 1944.

(2) limitation - whether the show cause notice dated 8-10-1982 was time barred, and

(3) estoppel - whether, after having approved the first price list No. 1/80 dated 27-2-1980 on 5-10-1980 without inclusion of the cost of inserts, the Assistant Collector was estopped from initiating proceedings to include such cost while approving the subsequent price lists.

2. We have heard both sides and have carefully considered all their submissions. On the question of merit, the department relied on the Calcutta High Court judgment reported at 1983 ELT 733 while the respondents relied on the contrary judgment of the Andhra, Pradesh High Court dated 26-10-1984 in the case of Mysore Structural Ltd. (W.P. No. 6696/1980). We put it to both sides that the issue on merits stood squarely settled by a subsequent judgment of the Supreme Court in the case of Empire Industries Ltd. MANU/SC/0186/1985 : 1985 (20) ELT 179 (SC) according to which the assessable value has to take in the entire intrinsic value of the article sought to be assessed irrespective of the fact that the manufacturer or the processor of the article does not pay for the cost of some of its components. On the issue of merit, therefore, we must rule in favour of the department.

3. As regards Limitation, we find that the case before us is not one of recovery of short levy or non-levy on the basis of approved price list and classification list. The fact is that the respondents submitted two price lists No. 2/80 dated 18-11-1980 and 1/81 dated 27-1-1981 proposing to revise their earlier prices. It was in the course of approval of these revised price lists that correspondence immediately ensued between the respondents and the department, with the Superintendent's letter dated 20-11-1980. Later, the Assistant Collector issued the impugned show cause notice proposing to include the cost of inserts in the assessable value of sleepers. On adjudication, he approved the revised price lists with such inclusion. His approval has, therefore, to relate back to the date from which the respective revised price list was to take effect, neither earlier nor later. The show cause notice did not propose to demand recovery of any differential duty for the period prior to the effective date of price revision. The Assistant Collector was, therefore, not entitled to confirm such a demand in his order-in-original. But at the same time, so far as the period on and from the effective date of price revision is concerned, recovery of differential duty on the basis of the revised price list as eventually approved after adjudication is in order and is not hit by the limitation of Section 11 A.

4. No question of estoppel arises either. The Assistant Collector was not seeking to review his approval accorded on the earlier price list No. 1/80. He started his inquiry only after the respondents sought to revise their price and accordingly submitted two new price lists No. 2/80 and 1/81. We find further that in price list No. 1/80 there is no mention at all of any decision of the Assistant Collector to include or exclude the cost of inserts. Nor has any other proceeding been brought to our notice in which the Assistant Collector took any such decision. When these facts were put to the respondents during the hearing, all that they said was that both sides had the knowledge and the presumption that th