Job work valuation under Central Excise: Rule 5 cannot apply where no sale takes place and duty is properly discharged.

Rule 5 of the Central Excise Valuation Rules, 2000 applies only to sale transactions where transportation is separately charged in the invoice, and it cannot be invoked in a pure job work arrangement. Here, the assessee processed materials supplied by the buyer and returned finished goods for conversion charges, with no sale of goods shown in the invoices or surrounding facts. Excise duty had been discharged on a value equal to or higher than the Ujagar Prints formula for job work valuation, so the duty liability was correctly discharged.

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Issues: Whether Rule 5 of the Central Excise Valuation Rules, 2000 could be invoked in a job work transaction where the goods were not sold, and whether excise duty had been correctly discharged on the valuation adopted by the assessee.

Analysis: Rule 5 applies only where excisable goods are sold in the circumstances contemplated by Section 4(1) of the Central Excise Act, 1944 and the cost of transportation is charged separately in the invoice. The transaction in question was one of job work: the assessee processed the material supplied by the buyer and returned the finished goods after receiving conversion charges. The invoices and surrounding circumstances showed that there was no sale transaction. The duty was discharged on a value equal to or higher than the value arrived at by applying the Ujagar Prints formula, under which the assessable value in a job work arrangement is based on the cost of raw materials, transportation to the job worker's premises, and conversion charges.

Conclusion: Rule 5 could not be invoked, and the assessee had correctly discharged the excise duty liability.

Ratio Decidendi: The transportation-cost exclusion under Rule 5 of the Central Excise Valuation Rules, 2000 is confined to sale transactions and does not apply to pure job work where no sale of goods takes place.

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