Job-work valuation under Section 4 excludes customer resale profit and follows raw material cost plus job charges and manufacturing margin.

In job-work manufacture, assessable value under Section 4 is determined by the landed cost of raw materials supplied by the customer plus the job worker's processing charges, manufacturing expenses and profit. The customer's subsequent resale price or trading profit does not form part of assessable value. A further uplift of the job charges by loading them again on the raw-material cost was held inconsistent with settled valuation principles, so the contrary valuation approach was not sustainable.

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Issues: Whether the assessable value of goods manufactured on job work basis had to be determined on the basis of the landed cost of raw materials supplied by the customer plus the job charges of the job worker, including manufacturing expenses and margin of profit, or on some higher basis linked to the customer's resale price.

Analysis: The valuation under Section 4 was held to follow the settled principle that, in job-work production, the assessable value includes the cost of raw materials brought to the factory, the processing or job charges, and the job worker's manufacturing expenses and profit. The customer's subsequent trading profit or resale price is not part of the assessable value. The approach adopted in the impugned order, which sought to further load the assessable value by treating the job charges as requiring a separate uplift on the raw-material cost, was found inconsistent with the controlling valuation principles.

Conclusion: The assessable value had to be approved on the basis of landed cost of raw materials plus the appellant's job charges, including manufacturing expenses and margin of profit; the contrary valuation was not sustainable.

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