Central excise valuation excludes bought out items and separately billed installation charges when only manufactured goods are assessable.

Central excise valuation must be confined to goods actually manufactured and cleared from the factory. Bought out or subcontracted items supplied directly to customers, and separately invoiced erection and commissioning charges, were not includible in the assessable value because they did not form part of the manufactured goods. Fresh legal grounds could also be entertained at the appellate stage where no new evidence was introduced and the material was already on record. On those facts, duty liability remained limited to the manufactured items only, and the appellate order was sustained.

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Issues: (i) Whether bought out or subcontracted items and erection and commissioning charges formed part of the assessable value of the manufactured goods for central excise duty. (ii) Whether fresh grounds could be entertained before the appellate authority.

Issue (i): Whether bought out or subcontracted items and erection and commissioning charges formed part of the assessable value of the manufactured goods for central excise duty.

Analysis: The valuation had to be confined to the goods actually manufactured by the respondents and cleared from the factory. The record showed that only two of the twelve supplied items were manufactured by the respondents, while the remaining items were bought out or subcontracted and sent directly to customers. The invoices separately reflected these items and erection and commissioning charges. On that factual basis, the value attributable to non-manufactured items could not be added to the excisable value.

Conclusion: The assessable value was limited to the manufactured items only, and the inclusion of bought out items was not justified.

Issue (ii): Whether fresh grounds could be entertained before the appellate authority.

Analysis: No additional evidence was shown to have been produced before the appellate authority, and the appellate stage was competent to examine points of law afresh. The appellate authority also had power to admit fresh grounds, and the facts considered were already part of the original record.

Conclusion: The fresh grounds were entertainable and did not vitiate the appellate decision.

Final Conclusion: The appeal by the Revenue failed because the appellate order correctly confined duty liability to the manufactured goods and was based on material already on record.

Ratio Decidendi: In central excise valuation, only the value of goods actually manufactured and cleared by the assessee is includible in the assessable value, and an appellate authority may entertain fresh legal grounds where no new evidence is introduced.

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