Job-work valuation of paper goods: sale price governs when reels are converted into sheets and sold from the job worker's premises.

Valuation of paper cleared in reel form for conversion into sheets through a job worker was held to depend on the sale price charged by the principal manufacturer when the goods were ultimately sold from the job worker's premises. The Tribunal observed that routing the goods through a job worker did not justify adoption of the lower reel price, because cutting reels into sheets was incidental or ancillary to completion of the manufactured product. Applying Rule 10A of the Central Excise Valuation Rules, it found no prima facie case for waiver of pre-deposit and directed deposit of the entire duty demanded, with waiver and stay limited to the balance of interest and penalty on compliance.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit in a dispute concerning valuation of paper cleared in reel form for conversion into sheets and sold from the job worker's premises.

Analysis: The duty demand arose because the goods were ordered and ultimately sold in sheet form, even though they were first cleared in reel form to a job worker for cutting into sheets. The Tribunal held that merely routing the goods through a job worker did not justify valuation on the lower reel price, since cutting reels into sheets was incidental or ancillary to completion of the manufactured product. It further noted that under Rule 10A of the Central Excise Valuation Rules, where job-worked goods are sold from the job worker's premises, duty is to be discharged on the sale price charged by the principal manufacturer. On that basis, the earlier stay orders for a prior period were treated as not governing the present position.

Conclusion: The appellant failed to establish a prima facie case for waiver of pre-deposit, and was directed to deposit the entire duty demanded, with waiver and stay granted only for the balance of interest and penalty on compliance.

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