Assessable value includes customer-supplied materials used in manufacture when valuing finished excisable goods.

For valuation under section 4 of the Central Excises and Salt Act, 1944, the assessable value is determined by the condition of the excisable product at the time of removal from the factory. The cost of raw materials and components used in manufacture forms an integral part of the value of the finished goods, and no distinction is made between materials purchased by the manufacturer and materials supplied by customers. On that basis, the cost of fabrics used in making the furniture was correctly included in the assessable value of the furniture cleared by the petitioners.

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Issues: Whether, for valuation under section 4 of the Central Excises and Salt Act, 1944, the cost of raw materials and components used in manufacture, including fabrics supplied by customers, forms part of the assessable value of the finished goods.

Analysis: The assessable value is required to be determined with reference to the condition of the excisable product at the time of removal from the factory. The cost of raw materials and components used in the manufacture is an integral element of the value of the finished article. No distinction can be made between materials purchased by the manufacturer and materials supplied by customers, because in both situations their value enters the assessable value of the finished goods.

Conclusion: The cost of the fabrics used in making the furniture was correctly included in the assessable value of the furniture cleared by the petitioners.

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