Job-work valuation excludes customer-supplied free raw materials where credit was already taken on those inputs.

In job-work valuation, free-supplied raw materials provided by the customer on challans are not includible in the assessable value of the processed goods when the customer has already taken CENVAT credit on those materials. The cited precedent on intermediate goods manufactured by a job worker was applied, and the contrary authorities relied on by the Revenue were treated as distinguishable. The valuation adopted by the lower authorities was therefore set aside and the demand failed, with consequential relief to the assessee.

---

---

Issues: (i) Whether the value of raw materials supplied free of cost by the customer was includible in the assessable value of the job-worked goods cleared by the appellant.

Analysis: The appellant received materials from customers under challans for job work, and the customers had already availed CENVAT credit on the supplied materials. The dispute was whether such free-supplied inputs could be added to the value of the processed goods under the valuation rules. The cited precedent on intermediate goods manufactured by a job worker was found to apply, and the contrary authorities relied on by the Revenue were treated as distinguishable.

Conclusion: The value of the free-supplied raw materials was not includible in the assessable value, and the demand was unsustainable.

Final Conclusion: The appeal succeeded and the valuation adopted by the lower authorities was set aside, with consequential relief.

Ratio Decidendi: Where goods are processed by a job worker from customer-supplied materials on challans and the customer has availed credit on those materials, the value of the free-supplied inputs cannot be added to the assessable value of the finished or intermediate goods.

---