Job-work valuation excludes scrap value when scrap is retained and sold by the job worker, with no extra assessable addition.

In job-work valuation of excisable goods, scrap generated during the process and retained and sold by the job worker is not includable in the assessable value of the finished goods where the job-worked goods are not independently dutiable in the hands of the job worker. The finished goods were assessed on landed raw-material cost plus conversion charges, and the Department's attempt to add scrap value as an additional charge was rejected. The Tribunal followed its earlier view, noted that it had been upheld by the Supreme Court, and held that no loading of scrap value into assessable value was warranted.

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Issues: Whether the value of scrap generated during job work and retained and sold by the job worker is includable in the assessable value of the finished goods.

Analysis: The dispute turned on valuation of job-worked excisable goods. The respondent had cleared the finished goods on duty payment on the basis of landed raw-material cost plus conversion charges, while the Department sought to add the value of scrap generated during the job-work process on the footing that it formed an additional charge. The Tribunal followed its earlier decision holding that where the intermediary or job-worked goods are not independently liable to duty at the hands of the job worker, the question of loading scrap value into the assessable value does not arise. The Tribunal also noted that the earlier view had been upheld by the Supreme Court, and therefore no different conclusion was warranted.

Conclusion: The value of scrap was not includable in the assessable value, and the Department's appeal failed.

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