Job-work valuation excludes principal-supplied inputs where the principal pays duty on final products.

In a job-work arrangement where the principal manufacturer supplies inputs and clears the final product on duty, the cost of those principal-supplied inputs is not includible in the assessable value of the intermediate goods manufactured by the job worker. Applying earlier Supreme Court principles, the valuation of the job-worked goods had to be confined to the value attributable to the job worker's manufacture, so the demand against the job worker could not be sustained. The extended limitation plea was not separately decided because the valuation issue itself was resolved in favour of the appellant, and the assessment demand was set aside.

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Issues: Whether the cost of inputs supplied by the principal manufacturer to the job worker was includible in the assessable value of the job-worked goods cleared to the principal manufacturer.

Analysis: The dispute turned on a job-work arrangement in which the principal manufacturer supplied certain inputs and availed credit thereon, while the job worker manufactured and cleared the intermediate goods to the principal manufacturer. Applying the principle accepted in the earlier Supreme Court decisions relied upon, the value of the principal-supplied inputs could not be added to the assessable value in the hands of the job worker when the final products were cleared on duty by the principal manufacturer. The extended limitation plea was not separately adjudicated because the substantive valuation issue itself was decided in favour of the appellant.

Conclusion: The cost of the inputs supplied by the principal manufacturer was not includible in the assessable value of the job-worked goods, and the demand could not be sustained.

Final Conclusion: The valuation demand against the job worker was set aside and relief was granted on the substantive tax issue.

Ratio Decidendi: In a job-work arrangement, where the principal manufacturer supplies inputs and clears the final product on payment of duty, the cost of such principal-supplied inputs is not includible in the assessable value of the intermediate goods manufactured by the job worker.

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