Job-work valuation follows landed cost plus conversion charges; supplier overheads and sale price are excluded, with limited invoice verification remanded.

In valuation of goods manufactured on job-work basis, assessable value is confined to the landed cost of raw materials plus conversion charges, including the job-worker's margin of profit; the supplier's overheads and downstream sale price are not part of the assessable value. The Tribunal noted that the material on record, including the Chartered Accountant's certificate and invoices, supported inclusion of freight and transit insurance in landed cost, but limited verification of sample invoices was still required. The matter was therefore remanded only for that factual verification.

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Issues: (i) Whether, in valuing goods manufactured on job-work basis, the assessable value could include the supplier's overheads or be determined on the basis of the trader's sale price; (ii) whether the matter required limited verification of the sample invoices produced before the Tribunal.

Issue (i): Whether, in valuing goods manufactured on job-work basis, the assessable value could include the supplier's overheads or be determined on the basis of the trader's sale price.

Analysis: The applicable valuation principle for job-worked goods is the landed cost of raw materials together with conversion charges, including the job-worker's margin of profit. The value is not to be inflated by the trader's overheads merely because the finished goods are later sold by the supplier. The Tribunal also noted that the record did not establish that the parties were not dealing at arm's length or otherwise than on principal-to-principal basis. On the material available, the Chartered Accountant's certificate and the invoices supported inclusion of freight and transit insurance in landed cost.

Conclusion: The supplier's overheads and sale price could not form part of the assessable value; the valuation approach based on landed cost and conversion charges was upheld.

Issue (ii): Whether the matter required limited verification of the sample invoices produced before the Tribunal.

Analysis: The appellant produced sample invoices to show the landed cost of raw materials at the factory gate, including freight and transit insurance. Since these invoices were relied upon for the limited purpose of confirming the cost component, verification by the adjudicating authority was considered necessary.

Conclusion: The matter was remanded for limited verification of the sample invoices.

Final Conclusion: The appeal succeeded to the extent that the valuation adopted by the lower authority was not accepted in full, and the matter was sent back only for limited factual verification.

Ratio Decidendi: In valuation of goods manufactured on job-work basis, assessable value is confined to the landed cost of raw materials plus conversion charges including the job-worker's profit, and it does not include the supplier's overheads or downstream sale price.

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