Excise valuation of job work goods turns on new manufacture, so duty applies to full finished-goods value.

Customer-supplied materials processed through cutting, shaping, perforating, channeling, ribbing and assembling into tanks, dust catchers and similar articles were treated as manufacture of a new and distinct commodity. As a result, excise valuation had to include the value of the materials incorporated in the finished goods, and not be confined to job work charges alone. The claimed exemption under Notification No. 119/75-C.E. could not be used to restrict duty to labour charges where the process produced identifiable finished goods with separate identity and utility.

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Issues: Whether goods fabricated on job work from materials supplied by customers were assessable on the full value of the finished goods or only on the job work charges, and whether exemption under Notification No. 119/75-C.E. was available.

Analysis: The fabrication process of cutting, shaping, perforating, channeling, ribbing and assembling customer-supplied materials produced distinct finished articles such as tanks and dust catchers. The working of the materials resulted in a new commodity with a separate identity and utility, and the mere characterisation of the activity as job work did not limit valuation to processing charges alone. Since the manufacture yielded new goods from the supplied materials, the assessable value had to include the value of the materials incorporated in the finished products, and the claimed exemption could not be applied to confine duty to labour charges only.

Conclusion: The assessable value was correctly taken on the full value of the manufactured goods, and the assessee was not entitled to restrict duty to job work charges.

Final Conclusion: The appeal failed on the valuation question because the process amounted to manufacture of new goods from customer-supplied materials.

Ratio Decidendi: Where customer-supplied materials are processed into a new and distinct commodity, excise duty is chargeable on the value of the finished goods and not merely on the job work charges.

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