Assessable value of compressors excludes duty-paid bought-out accessories supplied without manufacturing, as reclassification could not sustain duty demand.

Bought-out duty-paid accessories supplied with refrigerant compressors could not be added to the compressors' assessable value where they were purchased from the market, stored outside the factory, subjected only to quality checks, and cleared without any manufacturing process. The classification dispute also failed because the accessories and spares had to be examined under the existing trade notices and the department's earlier classification practice, which treated specified items under their own headings unless they were fitted as optional items at the customer's instance. On that basis, reclassification and the resulting duty demand were not sustainable.

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Issues: Whether the value of bought-out accessories supplied with refrigerant compressors could be included in the assessable value of the compressors, and whether such accessories and related items were correctly classifiable with the compressors so as to sustain the duty demand.

Analysis: The demand proceeded on the premise that accessories and optional fitments supplied with compressors should be treated as part of the compressor and valued accordingly. The record showed, however, that several items were bought from the market on payment of duty, stored outside the factory, subjected only to quality control checks, and then sent to customers without any manufacturing process. Such duty-paid bought-out goods could not be subjected to duty again merely because they were supplied along with the main equipment. The classification dispute also had to be examined in the light of the existing trade notices and the classification adopted earlier by the department, which had treated specified accessories and spares under their respective headings or under the compressor heading only where they were fitted as optional items at the instance of customers. On that basis, the attempt to reclassify the goods and to add their value to the compressor assessable value was not sustainable.

Conclusion: The accessories in question were not liable to be added to the assessable value of the compressors, and the Revenue's classification and duty demand failed.

Final Conclusion: The demand, penalty, and interest could not survive, and the Revenue appeal was liable to be dismissed.

Ratio Decidendi: Bought-out duty-paid accessories, when not manufactured in the factory and not shown to form part of the assessable goods as manufactured, cannot be included again in the assessable value or subjected to a fresh duty demand merely because they accompany the principal equipment.

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