Job-work assessable value cannot be raised by adding assumed manufacturing profit when only job charges are received.

For goods manufactured on a job-work basis and remunerated through job charges, the assessable value could not be artificially enhanced by adding an estimated manufacturing profit. Where the Department accepted that the job worker received only the agreed job charges and no separate consideration, those charges were treated as covering the manufacturing cost and the job worker's profit. On that basis, there was no legal foundation for a further duty demand on a presumed profit element, and the differential excise duty claim was unsustainable.

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Issues: Whether, in respect of goods manufactured on job work basis for a customer and remunerated by job charges, the assessable value could be enhanced by adding an estimated manufacturing profit for levy of central excise duty.

Analysis: The Department proceeded on the footing that the respondent received only job charges from the customer and no additional consideration beyond that amount. In such circumstances, the job charges were treated as covering the manufacturing cost as well as the profit of the job worker. On those facts, there was no basis to demand duty separately on an assumed element of manufacturing profit.

Conclusion: The assessable value was not liable to be increased by adding manufacturing profit, and the demand of differential duty was unsustainable.

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