Job-work valuation rejects buyer depot price where no principal-agent or related-person relationship is proved.

In a job-work valuation dispute, assessable value must be computed under settled job-work principles, namely the value of raw materials, job charges, manufacturing expenses and manufacturing profit, without adding the buyer's post-manufacturing depot selling price. The principal-agent theory was rejected because the record did not show any authorization or factual basis for treating the manufacturer as the buyer's agent, and no related-person relationship or mutuality of interest was established. The resulting duty demand could not be sustained, and the consequential penalty and interest also failed. The document confirms that depot price cannot replace job-work valuation absent a legally relevant relationship.

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Issues: Whether the assessable value of excisable goods manufactured on job-work basis was to be determined on the depot selling price of the buyer or on the basis of job-work valuation principles, whether the relationship between the manufacturer and the buyer was one of principal and agent, and whether the duty demand, penalty and interest could survive.

Analysis: The goods were manufactured by the assessee on job-work basis and cleared to the buyer's depots. The demand was founded on the premise that the buyer was the principal and the assessee its agent, so that the depot price represented the assessable value. The notice, however, did not allege contravention of the notification relied upon in the order, nor did the record show any authorization or factual basis to treat the assessee as an agent. The governing principle for job-work valuation remained that laid down by the Supreme Court, under which assessable value is confined to the value of raw materials, job charges, manufacturing expenses and manufacturing profit, and does not include the trader's post-manufacturing profit. The authorities also could not sustain valuation on depot price in the absence of a finding of related-person transaction or mutuality of interest. Since the demand itself rested on an overruled tribunal decision and was inconsistent with the settled law and the Board's clarification, the consequential penalty and interest also failed.

Conclusion: The depot selling price could not be adopted, the principal-agent theory was rejected, and the duty demand, penalty and interest were not sustainable; the appeal succeeded.

Ratio Decidendi: In a job-work arrangement, assessable value must be determined on the settled valuation principles applicable to the manufacturer-job worker and cannot be shifted to the buyer's depot price absent proof of a legally relevant principal-agent or related-person relationship.

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