Erection and commissioning charges excluded from assessable value where goods were complete on factory clearance.

Charges for erection and commissioning of manufactured goods are not includible in assessable value unless those activities are shown to be incidental or ancillary to completion of the product under section 2(f) of the Central Excise Act. The record did not establish that the machinery was incomplete when cleared from the factory or that it became complete only after erection and commissioning. As erection and commissioning ordinarily occur after clearance and readiness for use, the charges were held outside the duty assessment.

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Issues: Whether charges recovered for erection and commissioning of manufactured goods were includible in the assessable value on the footing that such activities formed part of manufacture.

Analysis: The definition of manufacture under Section 2(f) of the Central Excise Act, 1944 covers only such processes as are incidental or ancillary to the completion of the manufactured product. For erection and commissioning charges to be included, it had to be shown that the goods were not complete when cleared from the factory and became complete only upon erection and commissioning. No such case was established on the facts, and the record did not indicate that the machinery was incomplete at the time of clearance. Erection and commissioning ordinarily take place after the goods are cleared and ready for use.

Conclusion: The charges for erection and commissioning were not part of the assessable value and were not includible in the duty assessment. The appeal succeeded.

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