Job work valuation excludes customer-supplied raw materials from assessable value when Modvat credit and final duty are already accounted for.

In job work manufacturing, the value of customer-supplied raw materials is not includible in the assessable value of goods manufactured by the job worker where the supplier has already taken Modvat credit and duty is ultimately discharged on the final product by the principal manufacturer. The settled principle applied is that the job worker is not required to add the value of such supplied materials to the duty base when the materials enter production under job work challans. This approach follows the Tribunal's consistent view in similar cases and preserves valuation on the basis applicable to the job work arrangement, without duplicating duty on the supplied inputs.

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Issues: Whether, in job work undertaken on materials supplied by customers, the value of such raw materials is includible in the assessable value of the intermediate/final goods manufactured by the job worker.

Analysis: The goods were manufactured using materials received from customers under job work challans, and the dispute was whether the job worker was required to add the value of those materials while paying duty. The controlling principle applied was that where the supplier of raw materials has already taken Modvat credit and duty is ultimately discharged on the final product by the principal manufacturer, the job worker is not required to include the value of the customer-supplied raw materials in the assessable value of the goods manufactured on job work basis. The decision followed the settled view already applied in the cited precedent and by the Tribunal in similar circumstances.

Conclusion: The value of customer-supplied raw materials was not includible in the assessable value, and the assessee succeeded.

Final Conclusion: The duty demand based on inclusion of the supplied raw-material value was unsustainable, and the assessee's appeal was allowed.

Ratio Decidendi: In job work manufacture, where the supplier of raw materials has already availed Modvat credit and duty is ultimately paid on the final product by the principal manufacturer, the job worker is not required to add the value of those supplied materials to the assessable value of the goods manufactured by him.

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