Job-work valuation governs returned processed goods; later finishing and sale do not shift assessment to final transaction value.

Valuation of goods returned from a job worker depended on Rule 12B and the Board circular, not on the assessee's later sale price. The Court accepted the Tribunal's view that once the processed goods were received back from the job worker, duty liability had to be determined at that stage, and the subsequent cutting, stitching, ironing, folding and packing by the assessee did not change the valuation basis. Assessment therefore had to follow the job-work valuation method, with grey fabric value plus job charges, rather than transaction value at final customer clearance. The appeal was rejected.

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Issues: Whether goods returned from a job worker and subjected to cutting, stitching, ironing, folding and packing were to be assessed at the transaction value at which the assessee cleared them to customers, or at the value of grey fabric plus job charges under the job-work valuation rule.

Analysis: The valuation dispute turned on the scope of Rule 12B and the Board circular relied upon by the Tribunal. The Tribunal had held that when processed goods were received back from the job worker, duty liability crystallized at that stage and the subsequent activities undertaken by the assessee did not amount to manufacture. The Court found that Rule 12B and the circular had been correctly interpreted by the Tribunal, and that the valuation was to be determined on the basis applicable at the job-worker's stage rather than on the eventual sale price.

Conclusion: The assessment could not be based on the transaction value of the finished sales made by the assessee; the appeal was rejected.

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