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2006 (5) TMI 405 - AT - Central Excise
Issues: Assessment of assessable value of sulphonic acid for duty calculation based on the reduction of cost of spent sulphuric acid by the job worker.
Analysis: The case involves an appeal by the Revenue against the order of the Commissioner (Appeals) regarding the assessable value of sulphonic acid manufactured by M/s. Aureola Chemicals Ltd. on job work basis for M/s. Hindustan Lever Limited. The respondents availed Modvat credit for inputs used in manufacturing sulphonic acid and reduced the cost by Rs. 380/- per MT for the spent sulphuric acid retained during the process. The Revenue contested this reduction, arguing that the assessable value should include the total cost of raw materials plus processing charges, as per the Supreme Court decision in Ujagar Prints v. UOI & Others. The Revenue contended that any waste or by-product should either go back to the principal manufacturer or be cleared from the job worker's premises, without reducing the assessable value of the main product. The Tribunal agreed with the Revenue's argument, stating that the assessable value of sulphonic acid should consider the cost of inputs and processing charges without deducting the value of any by-product or waste product. The Tribunal emphasized that any waste product should either be returned to the principal manufacturer or cleared with appropriate duty payment from the job worker's premises. Therefore, the order of the Commissioner (Appeals) allowing the reduction of Rs. 380/- per MT for spent sulphuric acid in the assessable value of sulphonic acid was deemed incorrect in law. Consequently, the Tribunal set aside the Commissioner (Appeals) order and allowed the Revenue's appeal. In conclusion, the Tribunal clarified that the assessable value of goods for duty calculation should not be reduced by the value of waste products or by-products retained by the job worker, emphasizing the importance of considering the total cost of inputs and processing charges in determining the assessable value.
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