2006 (4) TMI 392 - AT - Central Excise

Summary

Issues:
1. Whether the value of raw materials received by the appellants for job work needs to be included in the assessable value of the final products.
2. Whether the appellants, as job workers, are required to pay duty on the raw materials supplied by customers under Rule 57F(4) challans.

Analysis:
1. The appeal stemmed from a dispute regarding the inclusion of the value of raw materials received by the appellants for job work in the assessable value of final products. The appellants argued that as job workers, they were not obligated to add the value of these materials under Rule 57F(4) challans. They contended that including this value would result in double availment of credit by customers who had already claimed modvat credit on the raw materials. Citing relevant judgments, including one by the Apex Court in a similar context, the appellants asserted that their procedure was known to the department, and the allegation of under-valuation was baseless. They emphasized that they were merely job workers returning goods to customers for further activity, hence no need to add the raw material value while discharging duty.

2. The Tribunal, after careful consideration, found in favor of the appellants. Referring to the Apex Court's decision and other tribunal rulings, the Tribunal highlighted that when raw materials are received for job work under Rule 57F(2)(b), the value of such materials need not be added to the assessable value of intermediate goods manufactured by job workers. It was noted that if the main manufacturer had already availed modvat credit and paid duty on the final product, job workers need not include the raw material value. Citing precedents where similar contentions were upheld, the Tribunal concluded that the appellants were not required to add the value of raw materials supplied by customers under Rule 57F(4) challans. Consequently, the impugned order was set aside, and the appeal was allowed.

In summary, the judgment clarified the obligations of job workers regarding the inclusion of raw material value in the assessable value of final products. It underscored that job workers need not add the value of raw materials received under specific challans if the main manufacturer has already availed modvat credit and paid duty on the final product. The decision was based on established legal principles and previous rulings supporting the appellants' position.