Job-work valuation under central excise follows cost of raw materials plus job charges, not the brand owner's sale price.

In a genuine job-work arrangement for biscuit manufacture, assessable value is to be computed on the cost of raw materials plus job charges. The wholesale price at which the brand owner later sells the same goods cannot be treated as comparable goods under Rule 6(b)(i) of the Central Excise Valuation Rules, because self-same goods are not comparable for that purpose. Rule 6(b) is inapplicable where the manufacturer receives raw materials from the brand owner, processes them, and returns the finished goods; the arrangement remained principal-to-principal despite quality-control and supply terms. The valuation principle in Ujagar Prints was held applicable.

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Issues: Whether the assessable value of biscuits manufactured on job-work basis for the brand owner was to be determined by adopting the wholesale price of the brand owner's sales as comparable goods under Rule 6(b)(i) of the Central Excise (Valuation) Rules, or on the basis of cost of raw materials plus job charges.

Analysis: The goods under assessment and the goods subsequently sold by the brand owner were the same goods, and such self-same goods could not be treated as comparable goods for valuation under Rule 6(b)(i). Rule 6(b) was held inapplicable to a job-work situation where the manufacturer receives raw materials from the brand owner and returns the finished goods, because the provision is meant for cases of captive consumption or use by the assessee. The terms of the agreement showing some quality control and supply arrangements did not establish that the job worker was merely an agent or that the relationship was anything other than principal-to-principal. The principle laid down for job-work valuation in Ujagar Prints was held applicable.

Conclusion: The assessable value had to be determined on the basis of cost of raw materials plus job charges, and adoption of the brand owner's wholesale price was not permissible.

Ratio Decidendi: In a genuine job-work arrangement, the assessable value is to be worked out on the cost of raw materials plus job charges, and the same goods later sold by the buyer cannot be treated as comparable goods for invoking Rule 6(b)(i).

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