Bought-out optional fittings excluded from assessable value when they do not form part of goods at clearance.

Separately purchased and separately invoiced GI pins supplied only on customer demand were treated as optional bought-out fittings, not as part of the porcelain insulators at the time of clearance. Because the pins were neither manufactured by the assessee nor used in the manufacture of the insulators, and were required only for later fitting to the pole, their cost could not be added to the assessable value of the insulators for central excise duty. The demand based on such inclusion was therefore unsustainable.

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Issues: Whether the cost of separately bought and separately invoiced GI pins supplied only on customer demand was includible in the assessable value of porcelain insulators for central excise duty.

Analysis: The GI pins were not manufactured by the assessee, were purchased as bought-out items, were not supplied with every insulator, and were required only at the stage of fitting the insulator to the pole. They did not form part of the insulator at the time of clearance and were in the nature of an optional fitting supplied separately. On these facts, the pins were not integral to the excisable goods cleared by the assessee, and their cost could not be clubbed with the value of the insulators for assessment.

Conclusion: The cost of the GI pins was not includible in the assessable value of the insulators, and the demand based on such inclusion was unsustainable.

Ratio Decidendi: Where a separately purchased and separately invoiced bought-out article does not enter the manufacturing process or form part of the excisable goods at the time of clearance, its cost is not includible in the assessable value of those goods.

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