Optional customer-requested testing charges were excluded from assessable value because they were not part of the manufacturing process.

Optional impulse test charges collected for a test arranged at the customer's specific request, through an outside concern and separately invoiced, were held not to form part of the assessable value of transformers. Charges for testing undertaken by the manufacturer as part of the manufacturing process would be includible, but additional customer-requested testing stands on a different footing and is excluded from valuation.

---

---

Issues: Whether impulse test charges collected from customers for a test conducted at their request through an outside concern were includible in the assessable value of transformers.

Analysis: The testing in question was not carried out by the manufacturer as part of the manufacturing process but was an additional impulse test arranged at the specific request of some customers. Separate invoices were issued for these charges, and the test was treated as an optional one undertaken for the customer. Charges for testing carried out by the manufacturer as part of manufacture would form part of assessable value, but additional testing at customer request stands on a different footing.

Conclusion: The impulse test charges were not includible in the assessable value. The issue was decided in favour of the assessee.

Final Conclusion: The impugned orders were set aside and the appeal was allowed.

Ratio Decidendi: Additional testing charges for an optional test conducted at the request of the customer, and not as part of the manufacturer's own manufacturing activity, do not form part of the assessable value.

---