Job-work valuation must follow the Ujagar Prints formula, not MRP-based valuation, for toothpaste not covered by section 4A.

For toothpaste manufactured on a job-work basis and not required to bear MRP declaration, valuation could not be carried out under section 4A of the Central Excise Act through Rule 4 or Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975. Those valuation rules are tied to section 4 principles and did not justify importing MRP-based valuation for goods outside the section 4A scheme. For such job-worked goods returned to the supplier, the proper basis was the Ujagar Prints formula. The section 4A and Rule 4 / Rule 6(b)(i) valuation approach was set aside, and value was to be re-determined accordingly for duty computation.

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Issues: Whether toothpaste manufactured on job-work basis and not required to bear MRP declaration could be valued by applying section 4A of the Central Excise Act or by resort to Rule 4 / Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, instead of the Ujagar Prints formula.

Analysis: The valuation rules define value with reference to section 4 of the Central Excise Act. On that footing, adoption of values determined under section 4A through Rule 4 or Rule 6(b)(i) was not sustainable for goods not covered by MRP-based valuation. For job-worked goods returned to the supplier, the proper basis of valuation was the Ujagar Prints formula, as followed in the cited precedent dealing with similar valuation methodology.

Conclusion: The valuation based on section 4A and Rule 4 / Rule 6(b)(i) was set aside, and the matter was remanded for re-determination of value in accordance with the Ujagar Prints formula and consequential duty computation.

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