Assessable value must include bought-out component parts of valves even when supplied separately from the finished goods.

Bought-out items such as dust caps, hex nuts and ring washers were treated as component parts of the valves, so their value formed part of the assessable value of the finished goods. Their includibility did not depend on whether they were fitted at the time of clearance or cleared separately, because their character as components remained unchanged. The assessee's challenge therefore failed, and the department's appeal succeeded.

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Issues: Whether the value of bought-out items fitted to the valves, namely dust caps, hex nuts and ring washers, was includible in the assessable value of the valves.

Analysis: The bought-out items were held to be component parts of the valves. Their inclusion in the value of the finished goods did not depend on whether they were fitted at the time of clearance or were cleared separately, since their character as component parts remained unchanged.

Conclusion: The assessable value had to include the value of the bought-out items, and the assessee's challenge failed.

Final Conclusion: The order of the Collector (Appeals) was set aside and the department's appeal was allowed.

Ratio Decidendi: Where bought-out items are found to be component parts of the manufactured product, their value is includible in the assessable value irrespective of whether they are fitted to the goods at the time of clearance.

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