TaxTMI 
TaxTMI 
“A”, a manufacturer and a registered assessee under central excise, provides the manufactured good to “B” along with erection and commissioning of the said good. B issues a Purchase order as composite contract i.e. supply as well as erection to A for this. Now, A is not able to bifurcate the Value provided in the purchase order toward goods and services, where value of service and goods cannot be independently identified .How valuation should be done in this case to pay excise duty and service tax?
Quantum of duty on goods
20 Sep 2015 
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Works contract valuation: option to apportion supply and erection or treat a portion of contract value as taxable service.
Where a composite supply of goods with erection and commissioning cannot be bifurcated, valuation may be determined either by vivisecting the gross contract consideration to allocate between goods and services or by applying the works-contract valuation approach that treats a prescribed portion of the gross contract value as taxable service; if the service provider is an individual, HUF, firm, or similar entity, reverse charge may apply. (AI Summary)
Where a composite supply of goods with erection and commissioning cannot be bifurcated, valuation may be determined either by vivisecting the gross contract consideration to allocate between goods and services or by applying the works-contract valuation approach that treats a prescribed portion of the gross contract value as taxable service; if the service provider is an individual, HUF, firm, or similar entity, reverse charge may apply. (AI Summary)