Job-work valuation excludes buyer's depot margin and freight, confirming assessable value is limited to manufacturing cost and conversion charges.

For CTD bars manufactured on a job-work basis, assessable value includes only the cost of raw materials supplied and the conversion charges, together with the job worker's profit. Costs and profits attributable to the buyer who receives and sells the goods, including depot margin, do not form part of the manufacturing value. Freight from the job worker's factory to the depot likewise is not an element of assessable value and cannot be added. On that basis, the original valuation and duty payment were treated as correct, and the contrary valuation was set aside in favour of the assessee.

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Issues: Whether, in respect of CTD bars manufactured on job work basis, the assessable value could include the depot margin and freight from the job worker's factory to the depot, and whether the valuation adopted on the basis of the sale price less such deductions was lawful.

Analysis: The settled principle for valuation of goods manufactured on job work basis is that the assessable value comprises the cost of raw materials supplied and the conversion charges, including the job worker's profit. Costs and profits attributable to the buyer who receives the converted goods and sells them in the market do not form part of the assessable value. The depot margin of the buyer and the freight from the job worker's factory to the depot were not elements of the job worker's manufacturing value and therefore could not be added to the assessable value.

Conclusion: The original valuation and duty payment were held to be correct, and the contrary finding was set aside in favour of the assessee.

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