Assessable value under excise valuation rules must include material cost where the transaction is not true job work.

Under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975, assessable value cannot be confined to grooving or processing charges where the transaction is not a true job-work arrangement. Because the record showed no basis for excluding the cost of the supplied metal materials, the appellate valuation limiting value to grooving charges alone was unsustainable. The valuation order was set aside and the original demand restored.

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Issues: Whether, for valuation purposes, the assessable value of metal rolls manufactured from supplied metal materials could be confined to the cost of grooving operation and exclude the cost of the metal materials under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975.

Analysis: The order of the lower authorities did not show any pleading or reason supporting the exclusion of the cost of metal materials from the assessable value. The case was not one of pure job work where raw materials are received, processing is done for job charges, and the finished product is returned to the supplier. In such circumstances, the valuation adopted by the appellate authority, limiting assessable value to grooving charges alone, could not be sustained under the valuation rule.

Conclusion: The exclusion of the cost of metal materials from the assessable value was unsustainable, and the Revenue's appeal succeeded.

Final Conclusion: The valuation order of the Collector (Appeals) was set aside and the original demand order was restored.

Ratio Decidendi: Where the transaction is not a true job-work arrangement, assessable value under Rule 6(b)(ii) cannot be restricted to processing charges alone and must not exclude the value of the materials forming the product.

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