Central Excise valuation of job-work LPG cylinders: customer-supplied material profit margin cannot be added to assessable value.

In valuation of LPG cylinders manufactured from steel sheets supplied by oil companies, the assessable value was held to be confined to the cost of raw materials plus job charges. The Revenue's attempt to add a notional margin of profit on the customer-supplied materials under Rule 6(b)(4) of the Central Excise Valuation Rules was rejected because the supplying oil companies were not the manufacturer for central excise purposes. The Tribunal followed its earlier identical ruling and accepted the assessee's valuation method, holding that the customer's profit margin could not be loaded into the manufacturer's assessable value.

---

---

Issues: Whether the margin of profit on raw materials supplied by customers could be added to the assessable value of LPG cylinders manufactured by the assessee under Rule 6(b)(4) of the Central Excise Valuation Rules.

Analysis: The dispute concerned valuation of LPG cylinders manufactured by the assessee from steel sheets supplied by oil companies. The assessable value had been declared on the basis of the cost of raw materials plus job charges. The Revenue sought to add a notional margin of profit on the materials supplied by the customers. The Tribunal followed its earlier decision on identical facts, where it had been held that the supplying oil companies were not the manufacturer for central excise purposes and that their profit margin could not be loaded into the assessable value in the hands of the manufacturer.

Conclusion: The addition of margin of profit was not justified, and the valuation adopted by the assessee was accepted.

---