Job work valuation of customer-supplied moulds: amortised value excluded from assessable value under the International Auto principle.

In job work arrangements involving moulds supplied free of cost by the customer, the note states that the amortised value of the moulds is not includible in the assessable value of the finished goods where the valuation issue falls within the principle applied in International Auto. It further notes that the movement of moulds under job work challans and the already amortised commercial treatment distinguish contrary Revenue authorities on their facts. On that basis, the document says the demand for duty, interest and penalty was unsustainable and the valuation addition should not be made.

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Issues: Whether the amortised value of moulds supplied free of cost by the customer was liable to be included in the assessable value of the manufactured goods, and whether the demand, interest and penalty could be sustained.

Analysis: The dispute turned on valuation under Section 4 of the Central Excise Act, 1944 read with the valuation rules. The moulds were supplied under job work arrangements and their cost had already been amortised in the commercial arrangement. The Tribunal held that the situation was covered by the ratio of the Supreme Court decision in International Auto, and that the earlier authorities relied on by the Revenue were distinguishable on facts. The Tribunal also accepted that the movement of moulds under job work challans and the amortised nature of the mould cost brought the case within the same legal framework, making the impugned valuation unsustainable.

Conclusion: The amortised value of the moulds was not liable to be added to the assessable value, and the demand of duty, interest and penalty could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where moulds supplied in a job work arrangement are already amortised and the governing valuation issue is covered by the principle applied in International Auto, their amortised value is not includible in the assessable value of the finished goods.

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