Tribunal: Customer-supplied drawings must be included in assessable value of goods; 10% valuation deemed arbitrary.

The Tribunal held that the value of drawings supplied by customers should be included in the assessable value of goods. However, it found the 10% value adopted by the Commissioner to be arbitrary and ordered a reevaluation with proper justifications for any new value determined, emphasizing that arbitrary values like 10% cannot be used without adequate basis. The order was set aside, remanding the matter for reconsideration.

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Issues:
Interpretation of Central Excise Valuation Rules regarding inclusion of drawings and designs supplied by customers in assessable value.

Analysis:
The appellant, a manufacturer of engineering goods, did not charge extra for goods made as per customers' drawings. The department demanded duty of Rs. 2,60,09,115 for the period from October 2004 to July 2011, considering 10% of the value of goods as additional consideration for drawings and designs. The appeal challenges this order.

The appellant argues that goods were sold at the same price to all buyers, with no extra charge for drawings. They assert that the transaction value to independent buyers should be the assessable value. The respondent defends the order, citing a Tribunal judgment that drawings and designs' value should be included in goods' value. The appellant cites another Tribunal judgment to argue against including the cost of drawings and designs.

The Tribunal notes that goods were custom-made per customer requirements, so the value for customers who supplied drawings cannot be compared to others. It concludes that the value of drawings supplied by customers should be included in assessable value, but the 10% value adopted by the Commissioner is arbitrary. The Commissioner must justify rejecting the appellant's 0.1% value based on a chartered engineer's certificate. The order is set aside, remanding the matter for reevaluation with proper justifications for any new value adopted, emphasizing that arbitrary values like 10% cannot be used without adequate basis.

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