Transaction value under central excise excludes customer-supplied drawings and designs where no separate recovery or price influence is shown.

Cost of drawings and designs supplied by a customer was not includible in the transaction value for central excise duty where that cost had already been absorbed in the final product on which duty was paid at clearance. The record showed no recovery of those charges from the customer and no material to indicate that the sale price was affected by any consideration other than the normal commercial price. On that basis, the demand raised on the drawings and designs cost was held unsustainable.

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Issues: Whether the cost of drawings and designs supplied by the customer was includible in the transaction value for levy of central excise duty.

Analysis: The demand was based on the premise that the drawings and designs provided by the customer formed part of the value of the final product. The record showed that the cost of such drawings and designs had already been absorbed in the final product on which central excise duty was paid at the time of clearance. There was no material to show that the appellant had recovered those charges from the customer, and there was no allegation or finding that the price of the goods was influenced by any consideration other than the normal commercial price.

Conclusion: The duty demand based on the cost of drawings and designs was not sustainable and the appeal was allowed.

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