2007 (6) TMI 440 - AT - Central Excise

Valuation - includibility - cost of raw materials - cost of transport of the raw materials - Held that - if the appellants had either opted to pay duty on the full value of the goods inclusive of the raw materials cost, then the Bhilai Steel Plant could have taken the credit on the duty so paid, or the appellants could have obtained the raw materials free of cost without payment of duty and supplied the bricks back to the Bhilai Steel Plant following the Rule 57F Procedure. The appellants have not strictly followed either of the procedures, but they paid duty on the job charges - appeal allowed.

Summary

Issues:
1. Duty payment on job charges without including the cost of raw materials and transport.
2. Interpretation of Rule 57F in relation to payment of duty.
3. Comparison with previous Tribunal and Supreme Court decisions.

Analysis:

1. The issue before the Tribunal was whether the appellants, who received raw materials free of cost from the Bhilai Steel Plant and supplied back manufactured bricks, were liable to pay duty only on job charges excluding the cost of raw materials and transport. The Department argued that duty should be paid on the value inclusive of raw materials and transport charges, citing a Supreme Court decision. The appellants, however, relied on a Tribunal decision and a Supreme Court judgment to support their position that duty payment should not include the cost of raw materials.

2. The Tribunal considered the interpretation of Rule 57F in light of previous decisions. The appellants argued that they were entitled to clear the bricks duty-free under Rule 57F as they had not taken any credit of duty paid on the raw materials. They contended that the Supreme Court had ruled in a similar case that the intermediate product producer is not liable to pay duty on inputs supplied by the final product manufacturer if no credit of duty was taken. The Tribunal found that the appellants did not strictly follow the procedures under Rule 57F but held that they need not pay duty as an intermediate manufacturer based on the cited Supreme Court decision and other Tribunal orders.

3. The Tribunal compared the present case with previous decisions, including the Supreme Court ruling in International Auto Products (P) Ltd. v. Commissioner of Central Excise, Bihar. The appellants' argument was supported by the fact that other Benches of the Tribunal had passed orders in line with the Supreme Court decision. The Tribunal, following the precedent set by the Supreme Court and other Tribunal decisions, ruled in favor of the appellants, setting aside the impugned order and allowing the appeal. The decision was based on the principle that as an intermediate manufacturer, the appellants were not required to pay duty on the bricks manufactured for the Bhilai Steel Plant.

In conclusion, the Tribunal's judgment clarified the duty payment obligations of the appellants in relation to the cost of raw materials and transport, interpreting Rule 57F and aligning the decision with relevant legal precedents set by the Supreme Court and previous Tribunal rulings.