Valuation of job-work moulds and dies: profit embedded in labour charges need not be added separately.

Profit was not required to be separately added to labour charges received by a job worker for valuation of moulds and dies manufactured on job work basis. The Tribunal held that such job-work charges ordinarily contain an element of profit, because the work could not reasonably be performed without it being embedded in the receipts. It distinguished the departmental circular as relating to captively consumed goods, not job-work clearances, and followed earlier decisions taking the same view. On that basis, the Commissioner's valuation addition was found unsustainable.

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Issues: Whether profit could be added to the labour charges received by a job worker while determining the assessable value of moulds and dies manufactured on job work basis.

Analysis: The charges received for job work were held to include an element of profit, since the work could not reasonably be carried out without profit being embedded in the receipts. The Board circular relied upon by the department was found to relate to captively consumed goods and not to job-work clearances. The Tribunal also relied on earlier decisions taking the same view that job charges paid to a manufacturer include profit.

Conclusion: Profit was not liable to be separately added to the labour charges for valuation purposes, and the addition made by the Commissioner was unsustainable.

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