Assessable value for engineering goods includes design charges, while erection and commissioning receipts need segregation of site services.

Designing and engineering charges for boilers and related equipment manufactured to customer specifications form part of the assessable value because they are pre-manufacturing inputs linked to the manufactured goods, while erection and commissioning receipts require segregation of labour, service, and other site-related elements before duty is computed. The extended period of limitation is available where relevant charges were not fully disclosed in excise records and suppression is established. However, any demand must remain within the scope of the show cause notice unless proper notice and opportunity are given, so excess demand requires reconsideration.

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Issues: (i) Whether designing and engineering charges relating to the boilers and related equipment were includible in the assessable value; (ii) whether erection and commissioning charges were includible in full or required segregation of site-related labour and services; and (iii) whether the extended period of limitation and demand beyond the amount proposed in the show cause notice were sustainable.

Issue (i): Whether designing and engineering charges relating to the boilers and related equipment were includible in the assessable value.

Analysis: The goods were sophisticated engineering products manufactured against individual contracts and to customer specifications. Designing and engineering were found to be necessary preliminaries to manufacture, undertaken with reference to the goods produced, and not independent post-clearance services. Such charges formed part of the cost and value of the manufactured goods and were not separable merely because the products were installed at site or involved technical inputs.

Conclusion: The designing and engineering charges were correctly held includible in the assessable value and the assessee's challenge on this issue failed.

Issue (ii): Whether erection and commissioning charges were includible in full or required segregation of site-related labour and services.

Analysis: The contracts covered both supply and site activities, but the site component could not be treated as identical to the value of the goods. Charges attributable to labour, services, and other site-related expenses were not themselves the value of the excisable goods. The proper approach was to identify the total receipts towards erection and commissioning and deduct the relatable labour and service elements, including transport if borne and embedded in those receipts. The matter therefore required factual recalculation on that basis.

Conclusion: Erection and commissioning charges were not mechanically includible in full; the duty demand on this head required reworking after appropriate deductions, and the matter was remanded for redetermination.

Issue (iii): Whether the extended period of limitation and demand beyond the amount proposed in the show cause notice were sustainable.

Analysis: The assessee had not fully disclosed the relevant charges in the excise records, and suppression was found to be established so that Section 11A could be invoked. At the same time, any demand in excess of the amount specifically proposed in the notice could not be sustained without notice and opportunity, and the authority had to stay within the permissible demand framework while recalculating liability.

Conclusion: The extended period was invocable, but the confirmed demand could not exceed the scope of the notice without due opportunity; the excess demand was set aside for reconsideration.

Final Conclusion: The order was sustained on the includibility of designing and engineering charges and on the finding of suppression, but the matter was remitted for fresh computation of the duty and penalty relating to erection and commissioning charges after making permissible deductions.

Ratio Decidendi: For high-value engineering goods manufactured to customer specifications, pre-manufacturing design and engineering inputs form part of assessable value, while site-related erection and commissioning receipts require segregation of labour and service elements before duty is computed.

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