Buyer-supplied dies and fixtures may enter assessable value, but valuation must follow realistic apportionment, not income-tax depreciation rates.

Cost of buyer-supplied dies and fixtures may be included in the assessable value of manufactured goods, but the addition must be made by realistic apportionment linked to the expected life, utility and actual output from those tools. The commentary rejects use of Income-tax depreciation rates for excise valuation because they serve a different purpose and may distort duty assessment. It also notes that valuation should be redetermined on proper principles, with relevant particulars and supporting certificates obtained if necessary, while limitation and penalty objections may be examined separately in accordance with law.

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Issues: Whether the cost of dies and fixtures supplied free of cost by the buyer was required to be included in the assessable value of the manufactured components, and whether the Commissioner's method of apportionment based on Income-tax depreciation rates was sustainable.

Analysis: The valuation issue was governed by the principle that the cost of buyer-supplied dies and fixtures could form part of the assessable value, but the addition had to be worked out by a realistic apportionment based on the expected life and utility of the dies and fixtures and the quantity of goods manufactured from them. The Tribunal relied on the Board's circular and earlier tribunal reasoning approving proportional value addition. However, the use of depreciation rates from the Income-tax Rules was found unsuitable for excise valuation because such rates are framed for a different purpose and may distort duty valuation. The matter therefore required fresh determination on proper valuation principles, with relevant particulars and supporting certificates to be obtained if necessary.

Conclusion: The inclusion of the dies and fixtures cost in principle was upheld, but the valuation method adopted by the Commissioner was set aside and the matter was remanded for fresh redetermination. The Commissioner was also left free to examine the limitation and penalty objections afresh in accordance with law.

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