Erection and commissioning charges excluded from excise assessable value where installed machinery became immovable property.

Erection and commissioning charges for machinery supplied to customers were held not to form part of the assessable value for central excise duty where the work was optional under only some contracts and depended on the customer's choice. The machinery was installed at the customer's premises and, once fixed, became embedded in the earth and assumed the character of immovable property. On those facts, the charges for erection and commissioning were excluded from the value of the machinery for excise purposes.

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Issues: Whether erection and commissioning charges collected for machinery supplied and installed at the customer's premises were includible in the assessable value for levy of central excise duty.

Analysis: The machinery was required to be installed at the customer's premises, but on the facts only some contracts involved erection and commissioning by the respondent, showing that such work was optional and dependent on the customer's choice. The machinery, once installed, became embedded to the earth and assumed the character of immovable property. On these circumstances, the charges collected for erection and commissioning were not part of the value of the machinery for excise purposes.

Conclusion: Erection and commissioning charges were not liable to be included in the assessable value.

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