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[Prabhat Salecha]

M/s. Marico ltd. Supplies raw material costing ₹ 25000 to job worker/processor M/s. Indian Extrusion. M/s. Indian Extrusion processes the raw material and supplies an intermediate product 'Plastic containers' to M/s. APPL (being other unit of M/s. Marico ltd) for packing of hair oil manufactured by Marico Ltd. M/s. Indian Extrusion charged ₹ 1400 as processing charges which include ₹ 1200 as processing charges and 200 as its profit margins. The cost of transportation of RM to premises of Indian Extrusion is ₹ 200 and sending the plastic jars to APPL is 60 rs. The rate is 12% Compute assesable value of M/s Indian Extrusion?

AI Summary

Assessable value determination: transaction value governs when a job-worker supplies intermediates to the principal's own unit, not captive consumption.
Where a principal sends raw material to a job-worker who returns an intermediate product to another unit of the principal for completion, the job-worker has not sold the finished goods; Rule 10A applies only when the job-worker sells finished goods on behalf of the principal. Consequently the situation is not captive consumption and assessable value should follow transaction value principles for the final product under the charging provisions, making additions like place-of-delivery transport irrelevant to the job-worker's valuation.