Exemption limit valuation for job-work goods includes customer-supplied raw materials, not just processing charges.

For computing the exemption limit under Notification No. 89/79, the assessable value of goods manufactured on job basis includes the intrinsic value of the finished goods, not merely the job or processing charges. Where customer-supplied raw materials are used, their value forms part of the total value under the applicable valuation principle in Section 4 of the Central Excises and Salt Act. The separate applicability of Notification No. 119/75 was treated as unnecessary to decide the exemption-limit question. The stated result is that exemption-limit computation must proceed on the full value of the manufactured goods, including the value of raw materials supplied by customers.

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Issues: Whether, for computing the exemption limit under Notification No. 89/79 dated 1-3-1979, the full value of goods manufactured on job basis must include the value of raw materials supplied by customers, or only the job charges received by the manufacturer.

Analysis: The dispute turned on valuation of excisable goods manufactured from customer-supplied raw materials on job work basis. The relevant exemption notification did not define value, so the applicable principle was the valuation rule under Section 4 of the Central Excises and Salt Act. On that principle, the assessable value is not confined to processing charges alone but extends to the intrinsic value of the processed goods, including the value of the raw materials supplied for manufacture. The separate question whether the benefit of Notification No. 119/75 dated 30-4-1975 applied was treated as unnecessary for deciding the exemption-limit issue.

Conclusion: The full value of the manufactured goods, including the value of customer-supplied raw materials, had to be taken into account for computing the exemption limit under Notification No. 89/79; the assessee's contention that only job charges were relevant was rejected.

Final Conclusion: The departmental view on valuation was upheld and the exemption-limit computation was held to be based on the total intrinsic value of the goods, not merely the labour or processing element.

Ratio Decidendi: Where an exemption notification uses value for assessment of excisable goods manufactured on job work basis, and the relevant valuation provision applies, the assessable value includes the intrinsic value of the finished goods, including the cost of customer-supplied raw materials, and is not limited to job charges.

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