Excise valuation of bogies includes free-supplied wheels and axles when invoice value does not reflect full commercial price.

Under excise valuation principles, the assessable value of bogies cleared under Notification No. 120/75 had to reflect the full commercial price of the article as manufactured and cleared. Where the customer supplied wheels and axles free of cost, the invoice covered only the bogie minus those components, so the invoice value did not represent the complete intrinsic value of the goods. On that basis, the cost of the free-supplied wheels and axles remained includible in assessable value, and the differential central excise duty was correctly upheld.

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Issues: Whether, for valuation under exemption Notification No. 120/75-Central Excises, the cost of wheels and axles supplied free by the customer had to be included in the assessable value of bogies cleared by the manufacturer.

Analysis: The bogies were cleared under the notification on the basis of invoice value, but the invoice covered only the bogie minus wheels and axles. The free supply of wheels and axles by the customer meant that the price charged in the invoice was not the full commercial price of the complete article manufactured and cleared. The binding principle of excise valuation required assessment on the full intrinsic value of the article as cleared, including the value of components supplied free by the customer. Since the notification condition requiring invoice value to reflect the full commercial price was not satisfied, the cost of the free-supplied components remained includible in the assessable value.

Conclusion: The cost of wheels and axles supplied free by the customer was includible in the assessable value, and the demand for differential central excise duty was rightly upheld.

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