2007 (4) TMI 37 - AT - Central Excise

Valuation(Central Excise) Department demand interest from the appellant on the ground that they had manufactured goods on job work basis for impugned customer Held that department demand of interest was not sustained

Summary

Issues:
- Differential duty payment for manufacturing goods on job work basis
- Appellants' status as job workers of another company
- Allegations of being puppets in the hands of the other company
- Verification of actual sale price and discounts given
- Interpretation of relevant case laws
- Appellants' legal status as manufacturers
- Demand for duty based on the selling price of the other company

Analysis:
The appeal in this case was filed against an Order-in-Appeal passed by the Commissioner of Customs & Central Excise, Hyderabad, regarding the payment of a differential duty of Rs. 82,611.00 by the appellants for manufacturing goods on a job work basis for another company. The lower authority confirmed the demand for differential duty and imposed a penalty under the Central Excise Act and Rules. The appellants contested the findings, arguing that they were an independent Private Limited Company and not job workers of the other company. They highlighted the lack of evidence supporting the claim that they were puppets in the hands of the other company. The appellants also raised concerns about the Department's verification of the actual sale price and discounts given by the other company.

During the proceedings, the Commissioner (Appeals) upheld the lower authority's decision, considering the appellants as job workers based on the supply of plant and machinery by the other company. However, the Tribunal found that the mere hiring of machinery was not enough to establish the appellants as dummies. The Tribunal referenced previous cases where the processor of raw materials was considered the actual manufacturer, emphasizing that the appellants, being a Private Limited Company, were the manufacturers in this situation. The Tribunal concluded that there was no legal basis to demand duty based on the selling price of the other company, as the appellants were the actual manufacturers.

In light of the above analysis, the Tribunal allowed the appeal, providing consequential relief to the appellants. The decision was based on the appellants' legal status as manufacturers, contrary to the Department's assertion that they were job workers, and the lack of evidence supporting the claim that they were controlled by the other company. The Tribunal's interpretation of relevant case laws and the distinction made between stock transfer and sale further supported the decision to grant relief to the appellants.