Assessable value excludes duty-paid component parts when they remain integral to the composite excisable goods.

Excise duty on a duty-paid electric motor fitted to a power-driven pumping set could not be included in the assessable value of the pumping set under section 4 of the Central Excises and Salt Act, 1944, because the motor remained a component of the composite goods and did not acquire a separate commercial identity. The exemption notification for power-driven pumps also indicated that duty already paid on the motor was not to be treated as part of the duty burden on the pump. The High Court further declined to reject the petition on the ground of alternate revisional remedy. The excise demands were quashed and refund was directed for amounts recovered under the short-levy orders.

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Issues: (i) Whether the excise duty payable on an electric motor fitted to a power-driven pumping set could be included in the assessable value of the pumping set under section 4 of the Central Excises and Salt Act, 1944. (ii) Whether the petition should be rejected on the preliminary objection that the petitioner ought to have pursued the revisional remedy before the Central Government.

Issue (i): Whether the excise duty payable on an electric motor fitted to a power-driven pumping set could be included in the assessable value of the pumping set under section 4 of the Central Excises and Salt Act, 1944.

Analysis: The exemption notification for power-driven pumps expressly indicated that, when such pumps are fitted with duty-paid electric motors, the duty already paid on the motor is not to be treated as part of the duty burden on the pump. Section 4, both in its unamended and amended form, excludes duty payable on the goods under valuation from the assessable value. The Court treated the expression "such goods" as including a component part which has not acquired a separate commercial identity merely because it is fitted into the final excisable article. Since the electric motor remained a component of the pumping set and did not become a separate marketable article by being fitted to it, the duty on the motor could not be added to the assessable value of the pump set.

Conclusion: The inclusion of excise duty payable on the electric motor in the assessable value of the pumping set was impermissible and the contention of the assessee succeeded.

Issue (ii): Whether the petition should be rejected on the preliminary objection that the petitioner ought to have pursued the revisional remedy before the Central Government.

Analysis: The challenge raised a question of statutory interpretation concerning the valuation provision and the exemption notification. In the circumstances, the Court declined to dismiss the petition at the threshold on the ground of alternate remedy, particularly after the petitioner had waited for a substantial period following the impugned orders.

Conclusion: The preliminary objection was rejected.

Final Conclusion: The impugned excise demands were quashed and the petitions were allowed with refund of any amount recovered under them, so far as the short-levy orders were concerned.

Ratio Decidendi: For valuation under section 4 of the Central Excises and Salt Act, 1944, duty payable on a component does not form part of the assessable value of the composite excisable goods unless the component has acquired a separate independent identity as distinct goods.

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