valuation in jobwork

[rajkumar shukla]

What will be assessable value in case manufacturer is a jobworker manufacturing excisable goods on behalf of principal manufacturer but the principal is not selling the excisable goods but it is being used  by it. accoring to me rule 10A and 10 of valuation rules are not applicable. Rule 8 is most likely rule but for rule 8 needs cost of production. whose cost of production is to be reckoned for the purpose? IS IT JOB WORKER OR PRINCIPAL?

[YAGAY and SUN]

Since the goods are being used by the principal manufacturer in the further manufacturing of finished goods, therefore, no excise duty will be payable.  You can seek the benefit of Notification No. 214/86 in this matter. 

[rajkumar shukla]

No, the goods are not used in the manufacture of final product. In fact, the principal is not manufacturer but simply uses the same. no excise duty is paid by the principal.In this case how the valuation is to be done?

[Anil Gagneja]

If goods will despatch to exempted areas (i.e. Himachal Pardesh, Uttarakhand) where principal manufacturer unable to give undertaking as per Notification 214/86.

Kindly confirm whether we pay excise duty or not.

 

 

 

[rajkumar shukla]

 job worker is paying duty. principal is just using the resultant goods.For paying duty a/value is to be arrived as there is no transactional value. principal is not a manufacturer.

[YAGAY and SUN]

Duty will be payable on the cost of rawmaterial plus jobwork charges.

[Anil Gagneja]

I agree with Mr. Pardeep Khatri point of view.

[rajkumar shukla]

whose cost of production is to be reckoned for the purpose? IS IT JOB WORKER OR PRINCIPAL?

[PAWAN KUMAR SHARMA]

 

In my opinon, following should be the mentod to calculate Assessable Value.

• As it is a case of Job Worker,
• where Price is not the sole consideration, and,
• also the exisable goods shall be used as Captive consumption by its Principal Manufacturer, 

Hence, the assessable value should be based on cost of production plus 10% i.e. Raw Material Cost + Job Work Charges + 10% of (RM Cost + Job Work Charges).

 

[rajkumar shukla]

ok, but cost of rawmaterial is to be taken as landed cost net of cenvat. landed cost at which place? if it is job worker, how the landed cost is to be computed?

[PAWAN KUMAR SHARMA]

landed cost should be the cost at receiving location i.e. if the material is directly received at Job Worker Location the Raw Material cost including Freight charges and net of cenvat would be the landed cost.

AI Summary

Valuation in jobwork: assessable value based on landed raw material cost plus jobwork charges and customary markup.
Where a jobworker manufactures excisable goods for a principal who uses them and no transaction value exists, assessable value should be derived from the cost of production framework: raw material cost landed at the jobworker's location (including freight and net of input credit) plus jobwork charges, with a customary markup applied where necessary to approximate assessable value when exemption for captive use is unavailable.