Job work valuation for biscuits must follow the job worker's deemed factory-gate value, not the principal's resale price.

For biscuits manufactured on job work from raw materials and packing materials supplied by the principal, assessable value must be determined under the job work valuation principle laid down in Ujagar Prints, on the basis of the deemed factory-gate value of the job worker's manufacture. The principal's resale price of similar biscuits cannot be adopted for valuation because that would depart from the governing rule for job work clearances. The valuation was therefore required to follow the job worker basis, and the issue was decided in favour of the assessee.

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Issues: Whether, for biscuits manufactured on job work from materials supplied by the principal, the assessable value was to be determined on the basis of the principal's sale price of its own biscuits or on the job worker's deemed factory-gate value under the principles governing job work valuation.

Analysis: The goods were manufactured by the appellant on job work from raw materials and packing materials supplied by the principal. In such a case, the applicable valuation principle was the one laid down for job work in Ujagar Prints, under which the assessable value is to be determined at the deemed factory gate on the basis of the job worker's manufacture and not by adopting the principal's resale price. The attempt to apply the price at which the principal sold similar biscuits was therefore inconsistent with the governing valuation rule.

Conclusion: The assessable value could not be determined by reference to the principal's sale price, and the valuation had to follow the job work principle. The issue was decided in favour of the assessee.

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