Assessable value excludes hydraulic testing charges for returnable containers when the activity is separate from manufacture.

Hydraulic testing charges recovered for tonners and cylinders used to supply goods were not includible in the assessable value where the testing was an independent activity connected with durable, returnable containers rather than manufacture of the goods. The analysis treats charges for maintenance or testing of such containers as outside the price of the manufactured product when there is no nexus with the manufacturing process. Applying that principle, hydraulic testing of tonners and cylinders used for caustic soda, hydrochloric acid, hydrogen gas and liquid chlorine was held unrelated to manufacture, so the charges were excluded from assessable value and the Revenue's challenge failed.

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Issues: Whether hydraulic testing charges collected from customers for tonners/cylinders used in supplying the goods were includible in the assessable value of the manufactured goods.

Analysis: The applicable principle was that charges relating to durable and returnable containers, and services connected with their maintenance or testing, are not part of the price of the manufactured goods when the activity is distinct from manufacture. Hydraulic testing of tonners/cylinders was held to have no nexus with the manufacture of caustic soda, hydrochloric acid, hydrogen gas or liquid chlorine. The charges were recovered for an independent activity relating to the containers, not for manufacture of the goods. The Board's circular and the earlier Supreme Court decision were treated as supporting this position.

Conclusion: Hydraulic testing charges were not includible in the assessable value, and the Revenue's appeal failed.

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