Job-work valuation principle applies to processed goods even when grey fabric is supplied by manufacturers, not traders.

For goods processed on job work, the settled valuation formula remained applicable even where the grey fabric was supplied by manufacturers rather than traders, because that distinction did not displace the governing principle. The challenge based on Notification No. 305/77-C.E. also failed, as the notification proceeded on a basis inconsistent with the Supreme Court valuation principle relied on for processed goods. The assessable value therefore could not be determined on that notification-based footing, and the valuation adopted by the lower authority was upheld.

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Issues: (i) Whether the valuation principle laid down for job-worked goods applied where the grey fabric was supplied by manufacturers rather than traders; (ii) Whether Notification No. 305/77-C.E. could be invoked to treat the principal manufacturer as the actual manufacturer for determining assessable value.

Issue (i): Whether the valuation principle laid down for job-worked goods applied where the grey fabric was supplied by manufacturers rather than traders.

Analysis: The distinction between grey fabric supplied by traders and grey fabric supplied by manufacturers did not alter the ratio governing valuation of processed goods under job work. The cited precedent was treated as applicable notwithstanding that the raw material supplier was itself a manufacturer.

Conclusion: The contention was rejected and the valuation principle continued to apply in favour of the assessee.

Issue (ii): Whether Notification No. 305/77-C.E. could be invoked to treat the principal manufacturer as the actual manufacturer for determining assessable value.

Analysis: The notification proceeded on a basis inconsistent with the Supreme Court ruling relied upon for valuation. Once the governing principle for job-work valuation was applied, the foundation of the notification-based argument did not survive for the purpose of assessable value.

Conclusion: The notification-based challenge failed and the assessable value could not be determined on that basis against the assessee.

Final Conclusion: The appeals failed, and the valuation adopted by the lower authority was upheld.

Ratio Decidendi: For goods processed on job work, the assessable value is determined by the settled job-work valuation formula, and the character of the supplier of the grey fabric does not by itself displace that principle or revive a contrary notification-based basis of valuation.

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