Central Excise Valuation rules have been amended with effect from 1-4-2007 to incorporate new provisions for valuation in case of job work as follows:

A new rule 10A has been inserted in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to provide that where goods are manufactured by a job-worker on behalf of a person (commonly known as principal manufacturer), the value for payment of excise duty would be based on the sale value at which the principal manufacturer sells the goods, as against the present provision where the value is taken as cost of raw material plus the job charges.

The liability to pay duty will rest with the job-worker as per the present practice. The value in such cases shall be:

(a) the 'transaction value of the goods at which they are sold' by the principal manufacturer for delivery at the time of removal of goods from the factory of job-worker, provided that the principal manufacturer and the buyer of the goods are not related and that the price is the sole consideration for the sale.

(b) the 'normal transaction  value  of goods sold at or about the same time', when sold by the principal manufacturer from a place other than the factory of jobworker, provided that the principal manufacturer and the buyer of the goods are not related and that the price is the sole consideration for the sale.  

Valuation for job work: transaction value of principal's sale governs excise duty liability, subject to unrelated parties. Valuation for excise on goods manufactured by a job-worker is based on the sale value at which the principal manufacturer sells the goods, replacing cost-plus-job-charge valuation; duty liability remains with the job-worker. If the principal sells for delivery at removal from the job-worker's factory, the transaction value at which the principal sells applies, subject to unrelated parties and sole consideration. If sold from a different place, the normal transaction value of contemporaneous sales by the principal applies under the same conditions.