Design and engineering charges are includible only when attributable to the reactor itself under excise valuation rules.

Rule 6 of the Central Excise Valuation Rules permits addition only of engineering, development, design, plans and sketches undertaken outside the factory when they are attributable to the relevant goods. On the facts, the record did not show that the entire design and engineering charges related solely to the reactor, or that any separable portion had been excluded to evade duty. The phrase "such goods" was construed to limit inclusion to charges referable to the reactor itself, so the balance design and engineering charges were not includible in assessable value.

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Issues: Whether the balance design and engineering charges were includible in the assessable value of the reactor.

Analysis: Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 permits inclusion only of engineering, development, art work, design work, plans and sketches undertaken outside the factory where such work is necessary for the assessable value of the relevant goods. On the facts, the record did not establish that the entire amount of design and engineering charges related solely to the reactor, or that any separable portion had been deliberately excluded to evade duty. The expression "such goods" was construed to mean that only the design and engineering charges attributable to the reactor itself could be added to value.

Conclusion: The balance amount of design and engineering charges was not includible in the assessable value; the issue was decided in favour of the assessee.

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