Valuation dispute over job-worker goods: prima facie case established, leading to waiver of pre-deposit and stay of recovery.

In a valuation dispute involving goods manufactured through job workers and sold by the principal manufacturer, the tribunal found a prima facie case for waiver of pre-deposit because there was no material showing that the principal manufacturer and the job workers were related or that the price was not the sole consideration. The Chartered Accountant's CAS-4 certificate was treated as unreliable because the cost computation did not properly account for Cenvat credit. Adoption of the highest profit margin of 41.48% was also unsustainable, as the valuation rules contemplate normal transaction value and the record did not justify rejecting the transaction pattern in favour of a highest-price approach. Waiver of pre-deposit and stay of recovery were therefore granted.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery in a valuation dispute involving goods manufactured through job workers.

Analysis: The dispute was confined to valuation. The goods were manufactured by job workers and sold by the principal manufacturer, with no evidence that the principal manufacturer and the job workers were related or that the price was not the sole consideration. The reliance placed on the Chartered Accountant's CAS-4 certificate was found unreliable because the cost computation had not properly taken Cenvat credit into account. The adoption of the highest profit margin of 41.48% was also found unsustainable, since the valuation rules contemplate normal transaction value and the record did not disclose any proper basis for rejecting the transaction pattern in favour of a highest-price approach. In the absence of material showing undervaluation, the appellant established a prima facie case.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery during pendency of the appeal.

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