Job-work valuation excludes extra profit loading where processing charges already include the job worker's margin and costs

In a job-work valuation context, assessable value was to be based on the cost of raw materials plus processing charges, with the job worker's margin of profit already embedded in those charges. Because the department had accepted the respondent as a job worker and the labour charges were treated as job charges, no further loading for packing cost, melting loss, or an additional profit margin was justified. The appellate order was therefore left undisturbed and the department's proposed additions were rejected.

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Issues: Whether, in the case of a job worker returning processed goods to the supplier, the assessable value could be enhanced by adding packing cost, melting loss, or an additional margin of profit over and above the job charges shown in the price list.

Analysis: The respondent was accepted by the department as a job worker. On that basis, the assessable value had to be determined in accordance with the principle that it comprises the cost of raw materials and the processing charges, which already include the job worker's margin of profit. The charge described as labour charges was treated as job charges, and the respondent had shown the margin of profit only in response to the departmental indication. In these circumstances, no further addition towards profit could be made, and there was no basis to interfere with the appellate order.

Conclusion: The additions proposed by the department were not justified and the appeal was dismissed, in favour of the assessee.

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