Assessable value includes fitted items that form part of goods as cleared at the factory gate; factual verification may reduce one duty demand.

Fitted divertors and wheels on coolers manufactured under Tariff Item 19A(2) were treated as part of the goods cleared at the factory gate because they improved functioning and facilitated movement, so their value was includible in the assessable value rather than excluded as accessories. As to one cooler variety, the differential duty demand was left open for factual verification on whether it was ever sold after fitment with wheels; if that statement proved correct, the demand was to be modified and consequential relief granted. The principle stated is that items forming part of the goods in the condition in which they are cleared are includible in valuation.

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Issues: (i) Whether the value of divertors and wheels fitted to coolers manufactured under Tariff Item 19A(2) of the Central Excise Tariff was includible in the assessable value of the coolers. (ii) Whether the differential duty demand relating to one variety of cooler required modification on the factual question whether it was ever sold after fitment with wheels.

Issue (i): Whether the value of divertors and wheels fitted to coolers manufactured under Tariff Item 19A(2) of the Central Excise Tariff was includible in the assessable value of the coolers.

Analysis: The fitted divertors improved the functioning of the coolers and the wheels facilitated their movement. The assessable value was to be determined by the form and condition in which the goods were cleared at the factory gate. On that basis, the fitted items were treated as part of the coolers and not as mere accessories excluded from valuation.

Conclusion: The value of the divertors and wheels was includible in the assessable value of the coolers, against the assessee.

Issue (ii): Whether the differential duty demand relating to one variety of cooler required modification on the factual question whether it was ever sold after fitment with wheels.

Analysis: The statement that the relevant cooler variety was never sold after fitment with wheels was treated as a factual matter requiring verification by the Assistant Collector. If the statement was found correct, the demand attributable to wheels fitted to that variety was to be modified and consequential relief granted.

Conclusion: The factual verification was directed and conditional modification of the demand was left open in favour of the assessee if the statement was found correct.

Final Conclusion: The revision application did not succeed on the principal valuation issue, and only a limited factual verification was directed for possible consequential modification of part of the demand.

Ratio Decidendi: Items fitted to goods which improve their functioning or facilitate their use and form part of the goods as cleared at the factory gate are includible in assessable value.

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