Job-work valuation of conversion-manufactured goods must follow costing data, not sale prices, under Ujagar Prints principles.

Valuation of pig iron manufactured on a conversion basis had to be determined under the job-work principle, not by adopting the assessee's own sale price or comparable clearances. The Tribunal applied the Ujagar Prints line of authority and held that value must be worked out from costing data, because the department's reliance on sale prices could include trader's profit and would not reflect job-work clearances correctly. As the valuation basis was unsustainable, the matter was required to be reconsidered de novo. The related issue of suppression and the consequential penalties was left open.

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Issues: Whether the assessable value of pig iron manufactured on conversion basis was to be determined on the basis of the assessee's own sale price or comparable goods, or whether valuation had to be worked out afresh on the job-work principle laid down in Ujagar Prints.

Analysis: The dispute concerned valuation of goods manufactured from raw material supplied by the customers, where the assessee received only conversion charges. The Revenue supported adoption of the assessee's own sale price and comparable clearances, while the assessee relied on the job-work valuation principle. The Tribunal held that the correct course was to determine value on the basis of the costing data in accordance with the Ujagar Prints line of authority, because the sale prices relied on by the department could include trader's profit and were not the proper basis for job-work clearances. Since the valuation issue had to be reconsidered, the related question of suppression and the consequential penalties were left open.

Conclusion: The assessable value could not be sustained on the basis adopted in the adjudication order and had to be reconsidered on de novo basis applying the job-work valuation principle; the appeals were therefore allowed.

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