2015 (9) TMI 1524 - AT - Central Excise

Mis-declaration - Valuation - Job work - Penalty - time limitation - Held that - The respondent informed the Jurisdictional Superintendent vide their letter dated 10-3-2000 regarding clearance of excisable goods as per agreement with the TISCO and the assessable value of converted goods shall the aggregate of landed cost of raw material (inclusive of freight) and conversion charges which are inclusive of profit margin of the manufacturer. Considering the factual position regarding the method of transaction between the respondent and the supplier, the documents covering such transaction, the deposition made by the supplier we find that no case for suppression of fact or misdeclaration can be made out against the respondent - Appeal dismissed - decided in favor of the assessee.

Issues involved:
Valuation of goods manufactured on job work basis, inclusion of freight in assessable value, time-bar for proceedings initiation, suppression of fact, liability for non-inclusion of freight, role of job worker in valuation of goods.

Analysis:
The case involved two appeals filed by the Revenue regarding the valuation of goods manufactured on job work basis, specifically focusing on the inclusion of freight in the assessable value for Central Excise duty. The Original Authority had concluded that the respondent should have included the freight incurred on inputs in the landed cost of material to determine the assessable value of the final product. Penalties were imposed on the respondents based on this conclusion. However, the Commissioner (Appeals) set aside the order on the grounds of time-bar, leading to the Revenue appealing against this decision.

In the grounds of appeal, the Revenue contended that the respondent intentionally did not include transportation charges in the assessable value to evade Central Excise duty, alleging suppression of fact. The respondents, on the other hand, argued that they acted based on the information provided by the principal manufacturer and were not aware of whether freight was included in the invoices. They highlighted that TISCO, the principal manufacturer, informed them later about the non-inclusion of freight in the invoice value, which was not known during the transaction period. The respondents emphasized that as job workers, they were not involved in the valuation process, and any alleged suppression should be directed towards the principal manufacturer.

After hearing both sides and examining the appeal records, it was observed that the Commissioner (Appeals) had thoroughly analyzed the issue. The audits conducted on the respondent's accounts revealed that the matter of non-inclusion of freight was raised in a later audit, following which the duty was paid by the respondent. It was noted that the freight element was included in invoices before a certain date but excluded thereafter, with no separate information provided to the respondents regarding this change. The Accounts Manager of TISCO confirmed that the freight was borne by them and that the non-inclusion of freight in the invoice value post a specific date was not separately communicated to the respondent. Considering the transaction details, documents, and statements made by the supplier, it was concluded that there was no case for suppression of fact or misdeclaration against the respondent. The decision of the Commissioner (Appeals) was upheld, leading to the dismissal of the Revenue's appeals and the disposal of the Cross-Objection filed by the respondent.

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