2009 (6) TMI 856 - AT - Central Excise

Summary

Issues Involved:
1. Demand of duty on products manufactured on job work basis for Ranbaxy Laboratories Ltd.
2. Demand of duty on products manufactured on job work basis for Proctor & Gamble (P&G).
3. Inclusion of interest and other expenses in the assessable value.
4. Penalty under Section 11AC and Rule 173(Q) of the Central Excise Rules 1944.

Summary:

1. Demand of duty on products manufactured on job work basis for Ranbaxy Laboratories Ltd.:
The appellant did not contest the duty liability on the products manufactured for Ranbaxy Laboratories Ltd. The duty liability as confirmed by the lower authorities on these products is upheld.

2. Demand of duty on products manufactured on job work basis for Proctor & Gamble (P&G):
The appellant contested the basis for confirming the demand of duty. The show cause notice proposed an average price method, while the adjudicating authority relied on cost accounting data. The tribunal found no error in the adjudicating authority's reliance on cost audit data, as the appellant had suggested this method.

3. Inclusion of interest and other expenses in the assessable value:
The tribunal held that interest costs should not be included in the assessable value, as per Cost Accounting Standard-4 (CAS-4) and CBEC Circular dated 13-2-03. However, "other expenses" should be included in the assessable value. The matter was remanded to the adjudicating authority to rework the duty liability by excluding interest costs and including other expenses.

4. Penalty under Section 11AC and Rule 173(Q) of the Central Excise Rules 1944:
The tribunal found that the appellant, being a job worker, had no intention to evade duty, as they would be reimbursed by the raw material supplier. Therefore, the penalty under Section 11AC was not warranted and was set aside. The department's appeal for enhancement of the penalty was rejected.

Conclusion:
The assessee's appeal was partly allowed, and the matter was remanded for re-quantification of duty. The department's appeal was rejected. The penalties imposed on the appellant were set aside.