Job-work valuation principle: excise assessable value follows raw material cost, labour and job worker profit, not brand owner sale price.

In job-work manufacture where the job worker is treated as the manufacturer, excise valuation must be based on the cost of raw materials supplied by the brand owner, labour charges and the job worker's profit. The brand owner's sale price is not the assessable value in such a case. Applying the governing Supreme Court ruling on identical facts, the valuation dispute was resolved in favour of job-work basis assessment, and the demand, interest and penalties were held unsustainable.

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Issues: Whether, in the case of goods manufactured by job workers from raw material supplied by the brand owner, the assessable value was to be determined on the basis of the brand owner's sale price or on the basis of the cost of raw material, labour charges and profit of the job workers.

Analysis: The valuation dispute was held to be covered by the governing Supreme Court decision on identical facts. Once the job workers are treated as the manufacturers, duty is chargeable at the stage of manufacture and the assessable value comprises the cost of raw materials, labour charges and the job workers' profit, in line with the circular applicable to such clearances. The brand owner's sale price is not the assessable value in such a situation. As the facts were found to be identical to the earlier decision, the impugned demand and penalties could not stand.

Conclusion: The assessable value had to be determined on the job-work basis and not on the brand owner's sale price; the demand, interest and penalties were unsustainable and the appeals succeeded.

Final Conclusion: The impugned order was set aside and the appellants obtained complete relief on merits, with the other challenges left unexamined.

Ratio Decidendi: In job-work manufacture, where the job worker is the manufacturer, excise valuation must be based on the cost of raw materials, labour charges and profit of the job worker, and not on the price at which the brand owner sells the goods.

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