Free-supplied inputs in job work are not added to assessable value when processed goods return to the principal manufacturer.

In job work under Rule 57F of the Central Excise Rules, 1944, free-supplied inputs received from the principal manufacturer and used in processing are not required to be added to the assessable value of the goods returned to that principal. The commentary distinguishes Ujagar Prints as applying to a different situation where the job worker cleared the final product himself. On that basis, the duty demand and equal penalty are stated to be unsustainable where the processed goods are returned to the supplier and duty is paid on clearance.

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Issues: Whether, in job work undertaken under Rule 57F of the Central Excise Rules, 1944, the value of inputs supplied free of cost by the principal manufacturer had to be added to the assessable value of the goods cleared on payment of duty, and whether the duty demand and penalty could be sustained.

Analysis: The appellants received duty-free inputs free of cost under the job work procedure and returned the processed goods to the principal manufacturer. The cited decisions were held to cover the dispute, particularly the view that where raw materials are received free of cost under Rule 57F(4) and the processed goods are returned to the supplier, the job worker is not required to add the cost of such free-supplied inputs to the value of the final product merely because duty was paid on clearance. The decision in Ujagar Prints was treated as distinguishable because it related to a different factual situation where the final product was cleared by the job worker himself.

Conclusion: The free-supplied inputs were not includible in the assessable value, and the duty demand and equal penalty could not be sustained.

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