Job work valuation under central excise must follow material cost plus job work charges, not comparable goods pricing.

Goods manufactured on job work basis under central excise are to be valued on the cost of materials used plus job work charges, not by reference to the price of comparable goods manufactured by the same manufacturer. Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 is described as applicable to captive use by a manufacturer, not to job work production. The text also notes that an earlier Tribunal view, upheld by the Supreme Court, supports this approach, while the later decision relied on by the Revenue is not treated as authority for comparable-goods valuation in job work cases.

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Issues: Whether goods manufactured on job work basis are to be valued by adopting the price of comparable goods manufactured by the same manufacturer, or by taking the cost of materials and job work charges.

Analysis: Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 applies to captive use by a manufacturer and not to manufacture on job work basis. For goods produced on job work basis, valuation must be based on the cost of the materials used together with the job work charges. The earlier Tribunal decision followed by the Commissioner (Appeals) was upheld by the Supreme Court, and the subsequent decision relied upon by the Revenue was not an authority for adopting comparable-goods valuation in such cases.

Conclusion: The goods manufactured on job work basis are not to be assessed on the value of comparable goods; valuation must be on cost of materials plus job work charges, in favour of the assessee.

Ratio Decidendi: Goods manufactured on job work basis under central excise are to be valued on the basis of the cost of materials and job work charges, and not by reference to the price of comparable goods or captive-use valuation rules.

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