Per K. Sankararaman :

Appellants had entered into a contract with M/s. Indian Oil Corporation for fabrication and supply of LPG tank wagon bullets which fell under erstwhile Tariff Item 68. Appellants had filed price list declaring Rs. 1,55,400/- as the assessable value for each bullet made up of Rs. 1,07,000/- as fabrication cost and Rs. 48,400/- as the material cost for BQ steel plates. The price list was approved and duty was paid on that basis by the appellants. Subsequently it was found that the appellants had also received certain parts required for the bullets required for being tested and fitted to the bullets, the cost whereof had not been included in the declared assessable value. Show cause notice dated 8.10.85 was issued by the Superintendent proposing demand of duty after increasing the cost of steel plates including the cost of fittings and adding notional margin of profit of 10% at the hands of the customers, IOC. The notice was followed by a corrigendum dated 22.6.87 issued by the Collector, in terms of which paragraphs 6 to 10 of the notice were substituted. The appellants were directed to show cause to the Collector. After receiving the reply from the appellants and grant of personal hearing, the Additional Collector passed the impugned adjudication order confirming the duty demand in respect of fittings. The demand in respect of the cost of BQ plates and margin of profit was dropped. The appeal challenges the duty demand.

2. Arguing the case of the appellants, learned Counsel stated that the fittings in question supplied by the customers were actually fitted to the bullets, not in their factory but at the Railway siding after the LPG tank bullets are mounted on the underframes. He contended that in these circumstances the cost of the fittings was not includible in the assessable value of the LPG bullets. He raised an alternative plea on the question of limitation stating that the contracts were seen by the inspector at the time of verification and the scrutiny of price list which was approved by the Assistant Collector. The contract disclosed the fact that the fittings in question were free supply items provided by IOC. In the circumstances, he pleaded that the longer time limit was not available to the Department for invoking the proviso to Section 11A of the Central Excises Act.

3. Resisting the submissions made by the learned Counsel, Shri H.K. Jain, Senior Departmental Representative contended that the fittings provided by the customers constituted component parts of the bullets and their value was rightly included in the assessable value of the goods in question. On the alternative plea raised in support of the appeal on the question of limitation, he had no comments to offer.

4. We have considered the submissions of both the sides. We have perused the record. We notice that the contract provides that necessary LPG tank wagon fittings for Dome and Barrel would be supplied free of cost by IOC which will be fitted and tested as per required specifications prior to installation and also after installation on tank wagons. It was clarified by the learned counsel that after such fitting and testing in the factory, these fittings are removed from the bullets and despatched separately to the railway siding to safeguard against damage during transit and subsequently fitted to the bullets after they are installed on the underframes. The fitment of the valves and other items to the bullets for purposes of testing in the factory before removal to the siding where the wagons are to be mounted on the underframes and their functional utility go to show that they are component parts of such bullets. Accordingly their value is required to be included in the assessable value thereof. We are, accordingly, of the view that on merits the finding by the adjudicating authority is correct. We uphold the same.

5. Coming to the alternative plea of limitation raised by the appellants, we find that the price lists filed before the