Job-work valuation under excise notification cannot be revised by adding input cost when sale price is properly disclosed.

For job-work clearances covered by Notification No. 27/92-CE (N.T.), duty was payable on the principal manufacturer's declared sale price, and assessable value could not be recomputed by adding differential raw material cost under section 4(1)(a). The cost-construction method was inapplicable where the notification-based valuation route had been adopted. Because the assessee had disclosed the principal manufacturer's sale price in declarations and paid duty accordingly, suppression of facts was not established. The demand was therefore time-barred, and the penalty could not be sustained; the assessee's valuation and disclosure were accepted.

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Issues: (i) Whether, for goods manufactured on job work for the principal manufacturer under Notification No. 27/92-CE (N.T.), excise duty could be demanded by enhancing the assessable value by adding differential raw material cost instead of adopting the principal manufacturer's sale price; (ii) Whether the demand and penalty were sustainable in the absence of suppression of facts and in view of limitation.

Issue (i): Whether, for goods manufactured on job work for the principal manufacturer under Notification No. 27/92-CE (N.T.), excise duty could be demanded by enhancing the assessable value by adding differential raw material cost instead of adopting the principal manufacturer's sale price.

Analysis: The goods were cleared on behalf of the principal manufacturer and duty had been paid on the sale price declared by that principal manufacturer. The notification permitted the job worker to discharge duty on the principal manufacturer's sale price. In that situation, valuation under section 4(1)(a) could not be altered by adding differential raw material cost. The cost construction method would apply only where the valuation route under the notification was not adopted.

Conclusion: The valuation adopted by the assessee was correct and the proposed addition of raw material cost was not permissible, in favour of the assessee.

Issue (ii): Whether the demand and penalty were sustainable in the absence of suppression of facts and in view of limitation.

Analysis: The assessee had disclosed the principal manufacturer's declared sale price in the relevant declarations and had paid duty accordingly. Since the declared price matched the actual sale price and there was no incorrect declaration, suppression was not established. The demand was therefore hit by limitation, and the penalty could not survive.

Conclusion: The demand and penalty were not sustainable on limitation, in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal succeeded because the duty demand based on enhanced valuation was unsustainable and the allegation of suppression failed.

Ratio Decidendi: Where a job worker is authorised under the relevant notification to pay duty on the principal manufacturer's sale price, assessable value cannot be recomputed by adding differential input cost, and a demand based on such enhancement cannot survive absent suppression.

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