Assessable value in composite contracts excludes post-clearance transport, laying, testing, and maintenance charges from pipe valuation.

In a composite contract for manufacture, transport, laying and jointing, testing, and maintenance, only the manufacturing cost and profit formed the assessable value of the pipes. Transportation from the factory gate to the site was treated as a separate post-clearance element and excluded from valuation. Laying and jointing, testing, and maintenance were likewise treated as post-manufacturing activities, not part of the manufacturing process. Because the execution-work elements were severable from the value of the manufactured goods, the disputed charges were not includible in assessable value, and the value was to be redetermined accordingly.

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Issues: Whether, under a composite contract for manufacture, transportation, laying and jointing, testing, and maintenance charges are includible in the assessable value of the pipes.

Analysis: The contract price was found to consist of manufacturing cost and profit on the one hand and charges for transportation, laying and jointing, testing, and maintenance on the other. Transportation from the factory gate to the site was treated as a separate post-clearance element and, following the settled principle excluding such cost from assessable value, was held not includible. Laying and jointing, testing, and maintenance were treated as post-manufacturing activities and not as part of the manufacturing process. The contract being composite, the expenditure attributable to execution work was regarded as separable from the value of the manufactured goods.

Conclusion: The disputed transportation, laying and jointing, testing, and maintenance charges were held not includible in the assessable value, and the matter was sent back for redetermination of value accordingly.

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