2009 (3) TMI 1019 - AT - Central Excise

Summary

Issues:
Assessable value determination based on job work basis for metal containers falling under Chapter 73 of the Central Excise Tariff Act, 1985.

Analysis:
The case involved the assessment of the assessable value of metal containers manufactured on a job work basis using raw materials supplied by another party. The appellants manufactured metal containers for a company on a job work basis, where the raw materials were supplied by the company, and the appellants only received job charges. The issue revolved around the assessable value of these metal containers, which was determined during a specific period based on the cost in accordance with the Central Excise (Valuation) Rules, 1975.

The Deputy Commissioner of Central Excise directed the appellants to add a profit margin of 26.04% to the assessable value, based on the profit margin shown in the balance sheet of the appellants for a particular year. However, the Tribunal set aside this decision, citing the Supreme Court's decision in the case of Ujagar Prints. The Tribunal emphasized that the assessable value should be based on the cost of raw materials, manufacturing cost, and manufacturing profit of the job worker. Since the job charges paid by the company already included the profit margin of the appellants, no additional profit needed to be added to the assessable value.

The Commissioner (Appeals) had upheld the Deputy Commissioner's decision to add a 26.04% profit margin, but this decision was overturned by the Tribunal. The Tribunal clarified that the actual addition of the profit margin as reflected in the profit and loss account was not necessary for the assessment purpose. The Tribunal concluded that the assessable value declared by the appellants was acceptable, making the issue of incorrect computation of the assessable value by the Deputy Commissioner irrelevant.

In light of the above findings, the Tribunal set aside the Commissioner (Appeals)'s order and allowed the appeal filed by the appellants. The Tribunal's decision was based on the principle that the job charges paid by the company already included the profit margin of the appellants, as per the settled law and relevant precedents.