Job-work valuation under Cenvat Credit Rules does not shift duty liability on the full value to the job worker.

A job-work clearance under Rule 4(5)(a) of the Cenvat Credit Rules does not make the job worker liable to pay duty on the full value of the processed goods, including the principal manufacturer's inputs. The duty burden in such a scheme rests on the principal manufacturer, and no failure by the principal to discharge that burden was alleged. The reliance on Ujjagar Prints was held inapposite because it concerned a different factual and legal setting, while the view in Menon & Menon Ltd. was supported by the rejection of the Revenue's challenge before the Supreme Court.

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Issues: Whether a job worker clearing goods manufactured from inputs sent by the principal manufacturer under Rule 4(5)(a) of the Cenvat Credit Rules was liable to pay duty on the full value of the goods including the value of the principal manufacturer's inputs.

Analysis: The job-work arrangement fell within Rule 4(5)(a) of the Cenvat Credit Rules, which permits inputs to be sent to a job worker and the processed goods to be cleared in accordance with the prescribed procedure. The provision does not cast duty liability on the job worker for the full value of the goods. The duty burden, in such a scheme, rests on the principal manufacturer, and there was no allegation that the principal manufacturers had failed to discharge that burden. The reliance on Ujjagar Prints was found misplaced because that case concerned a different factual and legal setting. The earlier view taken in Menon & Menon Ltd. was also supported by the rejection of the Revenue's challenge before the Supreme Court.

Conclusion: The job worker was not liable to pay duty on the full value of the goods, and the Revenue's appeal was rejected.

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