Valuation of mattresses sold with stitched covers includes cover cost in assessable and transaction value for excise duty.

Mattresses cleared to depots and sold there with stitched cloth covers are valued on the basis of the goods as actually sold from the depot. The stated principle is that, after substitution of section 4, transaction value includes all amounts paid or payable in connection with the sale, and the Board's valuation circular requires the cost of covers to be included where mattresses are cleared with covers. Even if the covers are invoiced separately, the realised price represents the plain mattress plus the stitched cover, so the cover value forms part of the assessable value and transaction value for central excise duty.

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Issues: Whether, in the case of mattresses cleared to depots and fitted there with cloth covers before sale, the value of the stitched covers forms part of the assessable value or transaction value for central excise duty.

Analysis: The Board's circular on valuation of mattresses, pillows and cushions clarified that where such goods are cleared with covers, the cost of the covers must be included in assessable value, while no addition is required when they are cleared without covers. After the substitution of Section 4, transaction value includes all amounts paid or payable in connection with the sale, and depot sales are valued with reference to the goods as actually sold from the depot. Since the mattresses emerging at the depot are sold with stitched covers, the price realised from the customer represents the value of the plain mattress plus the value of the covers, even if the covers are invoiced separately.

Conclusion: The value of the stitched cloth covers is includible in the assessable value and transaction value of the mattresses sold from the depot, and the challenge to the duty demand fails.

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