Assessable value of dyed yarn excludes job-worker dyeing cost where the assessee did not perform the manufacturing process.

Grey yarn sent to an independent job worker for dyeing could not have the dyeing cost added to the assessable value of the yarn cleared by the assessee, because the assessee did not itself carry out the dyeing operation. Under Chapter Note 2 of Chapter 55, the manufacturing act of dyeing, where dutiable, is attributable to the person who performs that process, so the job worker is treated as the separate manufacturer of the dyed yarn and duty, if leviable, falls on that job worker rather than on the assessee.

---

---

Issues: Whether the cost of dyeing grey yarn processed by an independent job worker could be included in the assessable value of the yarn cleared by the assessee, and whether the assessee could be treated as the manufacturer of dyed yarn.

Analysis: The assessee manufactured grey yarn and did not itself undertake the dyeing operation. The dyed yarn was returned after processing by another manufacturer. Under Chapter Note 2 of Chapter 55, dyeing, if dutiable, was attributable to the person who carried out that manufacturing operation. Since the assessee had not performed the dyeing, there was no basis to treat it as the manufacturer of dyed yarn or to load the cost of dyeing into the value of the goods cleared by it. The job worker was recognised as a separate manufacturer.

Conclusion: The cost of dyeing was not includible in the assessable value of the yarn cleared by the assessee, and duty, if leviable on dyeing, was payable by the job worker who performed that operation. The appeal succeeded and the assessee's contention was accepted.

---