Budget 2007 – Central Excise – Valuation in Case of Job Work

 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.