Job-work assessable value excludes sales tax borne by the principal buyer, not the job worker

In a job-work arrangement, sales tax shown on the invoice for inputs supplied by the principal buyer is not part of the job worker's assessable value for excise duty if the job worker did not actually bear that cost. The landed cost of inputs can be included only to the extent of costs incurred by the assessee, and sales tax paid by the principal buyer on procurement of coils and plates does not qualify. On that basis, the sales tax was held excludable from assessable value, and the associated duty demand, interest, and penalties could not be sustained.

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Issues: Whether the sales tax shown on the invoice for inputs supplied by the principal buyer was required to be included in the assessable value for discharge of excise duty by the job worker.

Analysis: The appellant was a job worker manufacturing seamless stainless steel tubes and pipes for the principal buyer. The sales tax in question was paid by the principal buyer on the purchase of coils and plates from the supplier, and the appellant had not incurred that cost. The value for excise duty on job-work goods could include the landed cost of inputs only to the extent of costs actually borne by the assessee. Since the sales tax was not a cost incurred by the job worker, it could not form part of the landed cost or assessable value. The reasoning also noted that, in a job-work arrangement, reversal and credit principles under the Cenvat scheme operate on duty-paid inputs, not on sales tax charged to the principal buyer.

Conclusion: The sales tax paid by the principal buyer was not includible in the job worker's assessable value, and the demand, interest, and penalties could not be sustained.

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