2006 (8) TMI 352 - AT - Central Excise

Summary

Issues: Determination of assessable value for finished products by job worker based on materials received from principal manufacturer.

Analysis:
1. Background: The appeal was filed against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals-I), Bangalore. The appellants, job workers of a company, were in dispute with the Revenue over the method of determining the assessable value of finished products after job work completion.

2. Contention: The appellant argued that the assessable value should be based on the cost of materials received from the principal manufacturer plus the processing charges incurred by them. However, the Revenue contended that the appellant should adopt 110% of the cost of materials cleared by the principal manufacturer.

3. Appellant's Arguments: The authorized representative of the appellants presented several arguments to support their case. They cited a Tribunal decision in a similar case and emphasized that the assessable value should not be equivalent to the cost of goods, especially in cases like job work basis valuation. They also highlighted errors in the Commissioner's findings and pointed out that previous decisions had followed the Tribunal's ruling.

4. Tribunal's Decision: After careful consideration, the Tribunal found in favor of the appellants. They noted that the method followed by the appellants, which included adding processing charges to the landed cost of inputs, was in line with the Apex Court's principle and a relevant Board's Circular. The Tribunal emphasized that Rule 8 of the Valuation Rules applied to the principal manufacturer, not the job worker, and therefore, the demand for differential duty was not justified. Consequently, the Tribunal set aside the duty demand and ruled out the levy of any penalty.

5. Conclusion: The Tribunal allowed the appeal, providing consequential relief to the appellants. The operative portion of the order was pronounced in open court, bringing the case to a close with a decision in favor of the appellants.