Composite valuation of trailers cleared with tyres includes tyre value for excise duty, and a modest penalty was sustained.

Where trailers are cleared as complete goods with tyres, the tyre value forms part of the assessable value for central excise purposes and is liable to duty. The commentary also notes that a modest penalty for non-declaration of tyres in the price list was upheld, as it was not considered excessive in the circumstances. The subject matter therefore turns on composite valuation of goods cleared together and the limited interference with a small penalty where no excessiveness is shown.

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Issues: (i) Whether the value of tyres supplied with trailers cleared from the factory was includible in the assessable value of the trailers for central excise duty purposes. (ii) Whether the penalty of Rs. 1,000 imposed for non-declaration of tyres in the price list was sustainable.

Issue (i): Whether the value of tyres supplied with trailers cleared from the factory was includible in the assessable value of the trailers for central excise duty purposes.

Analysis: The trailers were sold as complete goods with tyres, and the tyres formed part of the trailer as cleared. The value of the trailer alone had been included in assessment, while the tyres accompanying the trailers had not been brought into the assessable value. On that basis, the duty demand on the tyre value was justified.

Conclusion: The value of the tyres was includible in the assessable value of the trailers, and the demand of duty was upheld in favour of Revenue.

Issue (ii): Whether the penalty of Rs. 1,000 imposed for non-declaration of tyres in the price list was sustainable.

Analysis: The Tribunal found that the penalty imposed was modest and could not be regarded as excessive in the circumstances.

Conclusion: The penalty was sustained and the challenge to it failed in favour of Revenue.

Final Conclusion: The appeal failed on both valuation and penalty, and the departmental order was affirmed.

Ratio Decidendi: Where trailers are cleared as goods along with tyres, the tyre value forms part of the assessable value and may be subjected to duty, and a modest penalty will not be interfered with absent excessiveness.

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