Assessable value and third-party testing charges: additional inspection may be excluded, but the factual basis required fresh examination.

Third-party inspection and testing charges are not includible in the assessable value of forgings if the external testing is merely additional to the manufacturer's own testing, because the goods would already be marketable after the manufacturer's testing. Where the third party performs the entire testing ordinarily undertaken by the manufacturer, the cost may stand on a different footing. On the facts presented, there was no supporting evidence to show that the third-party testing was only optional or additional, so that factual question required further examination. The appeal was allowed, the impugned order was set aside, and the matter was remanded for fresh consideration of the includibility of inspection charges.

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Issues: Whether the cost of inspection/testing carried out by a third-party agency was includible in the assessable value of the forgings, and whether the matter required reconsideration on the evidence regarding whether such testing was additional and optional.

Analysis: If the third-party testing was merely additional to the testing already undertaken by the manufacturer, the cost of such testing would not form part of the assessable value because the goods would already have become marketable after the manufacturer's own testing. The position would be different where the entire testing ordinarily undertaken by a manufacturer was performed only by the third party. On the facts placed, no supporting evidence was shown to establish that the third-party testing was additional or optional, and that question needed examination.

Conclusion: The appeal was allowed, the impugned order was set aside, and the matter was remanded to the Commissioner (Appeals) for fresh consideration of the includibility of the inspection charges.

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