Excise valuation excludes spare wheel components not forming part of chassis cleared from the factory gate.

For excise valuation of motor vehicle chassis cleared from the factory gate, the value of spare wheel, rim, carrier, tyre and tube cannot be added merely because those items appear in vehicle specifications or are required under motor vehicle rules. The article explains that assessable value must be confined to the goods actually cleared, and the filing of classification and price lists under the self-removal procedure does not permit the department to enlarge valuation on that basis. A demand built on such inclusion was treated as without jurisdiction, and the corresponding show cause notice was quashed.

---

---

Issues: Whether the value of spare wheel, rim, carrier, tyre and tube was liable to be included in the assessable value of motor vehicle chassis cleared from the factory gate, and whether the show cause notice demanding differential duty was without jurisdiction.

Analysis: The petitioners manufactured motor vehicle chassis under approved specifications and price lists. The department sought to include the value of items referred to in the specifications on the footing that the vehicles were required to carry a spare wheel and tools under the Bombay Motor Vehicles Rules, 1959. The Court held that such requirement was irrelevant for determining the assessable value of goods cleared from the factory gate. It further held that the department could not determine assessable value on the basis of the specifications merely because the petitioners followed the self-removal procedure and filed classification and price lists. On that reasoning, the impugned show cause notice was held to have been issued without jurisdiction.

Conclusion: The inclusion of the value of spare wheel, rim, carrier, tyre and tube in the assessable value was impermissible, and the show cause notice was quashed.

Ratio Decidendi: For excise valuation of goods cleared from the factory gate, items not forming part of the cleared goods cannot be added merely because they are mentioned in the vehicle specifications or required under motor vehicle regulations; a demand based on such inclusion is without jurisdiction.

---