Assessable value where the raw material is provided by the customer:

The value of the raw material supplied by the customer would form a part of the assessable value. The fact that the manufacturer does not pay for the raw material is immaterial. The matter stands concluded by the judgement of the Supreme Court in the case of Burn Standard Co. Ltd. Vs. UOI – (1991) 36 ECC-1(SC). In this case the assessee manufactured wagons for Railways. The latter supplied wheel sets and certain other items free of cost. The price charged for the vehicle did not include the value of the items supplied free of cost. The Supreme Court held that free supply items like wheel sets etc. form part of the complete wagon and would lose their identity. It hardly matters as to how and in what manner the components of wagons were procured by the manufacturer. The assessee would be liable to pay duty on the normal price of the wagon. The present Valuation Rules follow this.