Full Judgment
2. The department's appeal against this order contends that the Tribunal's decision was concerned with the valuation of captively consumed goods and its ratio will therefore not apply to job work. This is not correct. Paragraph 20 of the Tribunal's order says, "We therefore hold that duty paid on inputs in regard to which Modvat credit was availed of by a manufacturer is not includable in the assessable value of the final product under Section 4(1)(b) of the Act and Rule 6(b)(ii) of the Rules." The valuation of the goods by a job worker is clearly under Section 4(1)(b). Disposing of the appeal filed against this order, the Supreme Court has said that, in determining the cost of a product "under Section 4(1) (b) of the Act read with Rule 6 of the Valuation Rules, the excise duty paid on raw materials also covered by the modvat scheme is not to be included." From the use of these words, it might appear that the Court's conclusion would not apply to a case of valuation under Section 4(1)(b) of the Act where Rule 6 is not involved. However, the ratio of the court's judgment will apply, in our opinion, in that situation too. The Court has said that the cost should be reckoned as a man of commerce would reckon it. To such a man the cost of the raw material would be reduced by the extent of duty paid on it, which is available to him as modvat credit. In calculating the cost of the material, he wold therefore exclude the modvat credit. In determining the value of the goods manufactured on job work, we are dealing with a situation in which we deem the job worker to be the manufacture, and proceed on the assumption that clearance by him is from a deemed factory gate market. This is what the Supreme Court has said in Ujagar Prints vs. UOI 1988 (38) ELT 535. The principles applied by the Court in Dai Ichi Karkaria would thus apply to cases of job work also. We see no reason to interfere.