Excise valuation: separate wear-and-tear charges excluded, while freight and commission included where pricing control extended beyond the factory gate.

Wear and tear charges linked to separate rental or maintenance-type activity were excluded from excise assessable value, as such amounts were not part of the sale of goods merely because they arose in the commercial relationship. Freight and distributor commission were included in transaction value and assessable value because the evidence showed the seller controlled pricing beyond the factory gate, and the claimed sale was not established as a true principal-to-principal factory-gate transaction. The documentation and oral evidence supporting inclusion were preferred over affidavits and invoices that failed to displace the department's case.

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Issues: (i) whether wear and tear charges were includible in the assessable value of the goods; (ii) whether freight and commission charges were includible in the transaction value / assessable value.

Issue (i): whether wear and tear charges were includible in the assessable value of the goods.

Analysis: The charges were treated as separate from the sale of the goods and were governed by earlier Tribunal precedent holding that rental or maintenance-type charges for dispensing or similar machines are not part of the assessable value of the goods sold. The reasoning adopted was that amounts connected with a different activity or service are not includible merely because they arise in the commercial relationship between the parties.

Conclusion: Wear and tear charges were not includible in the assessable value and the assessee succeeded on this issue.

Issue (ii): whether freight and commission charges were includible in the transaction value / assessable value.

Analysis: The pricing master, statements of the finance manager, and the pattern of debit notes showed that the assessee controlled the sale price beyond the factory gate and that distributor commission and freight formed part of the price structure recovered through the commercial arrangement. The material on record did not establish a true factory-gate sale on a principal-to-principal basis for these components, and the affidavits and invoices were found insufficient to displace the documentary and oral evidence relied upon by the department.

Conclusion: Freight and commission charges were includible in the transaction value / assessable value and the assessee failed on this issue.

Final Conclusion: The valuation dispute was resolved in a mixed manner: exclusion of wear and tear charges was upheld, while inclusion of freight and commission charges was sustained, leaving the dismissal of both appeals with only partial relief to the assessee.

Ratio Decidendi: For excise valuation, amounts relating to separate services or equipment charges are not includible merely because they arise in the commercial arrangement, but freight and commission are includible where the evidence shows that the seller controls the pricing structure beyond the factory gate and the claimed sale is not a true factory-gate transaction.

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