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2012 (2) TMI 162 - SC - Central ExciseDetermination of relationship - principal to principal or agent and principal - assessee engaged in the blending and packing of Glucon D for M/s Heinz India Pvt. Ltd excise duty paid at aggregate of cost of raw material, packing material and their job work charges Revenue seeking to levy duty on wholesale price of the product - Tribunal quashed additional excise duty levied Held that - Neither Tribunal addressed the aspect that whether the relationship between the Assessee and Heinz was one of principal to principal or that of an agent and principal, nor did it consider whether the Assessee and Heinz are related persons. It based its decision solely on the observation made by the Adjudicating Authority that assessee status is of hired labour. Therefore, matter is remanded back to the Tribunal. If the Tribunal finds that the Assessee and Heinz are related, it shall remit the matter to the Adjudicating Authority for fresh determination of the assessable value of the goods in question in accordance with law - Decided in favor of revenue for statistical purposes.
Issues Involved:
1. Relationship between the Assessee and Heinz. 2. Determination of the assessable value for excise duty purposes. 3. Applicability of the Ujagar Prints (II) and (III) judgments versus the S. Kumars judgment. Detailed Analysis: 1. Relationship between the Assessee and Heinz: The pivotal question was whether the Assessee was merely a processor of Rs.Glucon-D', independent of Heinz, or if it was related to Heinz, indicating a principal-agent relationship. The Tribunal had concluded that the Assessee's status was akin to that of hired labor and that Heinz was the manufacturer, thus implying that the duty should be levied on Heinz. Arguments by Revenue: - The relationship between the Assessee and Heinz was one of principal and agent, not principal to principal. - Heinz had complete control over the Assessee's activities. - Processed Rs.Glucon-D' was stored at Heinz's premises, and Heinz had taken an exemption from registration under specific rules, indicating control over the Assessee. Arguments by Assessee: - There was no allegation in the show cause notice that the Assessee and Heinz were related persons. - The dealings between the Assessee and Heinz were on a principal to principal basis. - The Assessee was also processing goods for other manufacturers, indicating independence from Heinz. 2. Determination of the Assessable Value: The core issue was whether the assessable value should be based on the price at which Heinz sold Rs.Glucon-D' in the wholesale market or on the aggregate of the cost of raw material, packing material, and job work charges. Revenue's Stand: - The price at which Heinz sold Rs.Glucon-D' in the wholesale market should be taken as the assessable value. - The Tribunal failed to examine the relationship between the Assessee and Heinz, and thus, the matter should be remitted for fresh adjudication. Assessee's Stand: - The assessable value should be determined based on the formula laid down in Ujagar Prints (II) and (III), which includes the processor's expenses, costs, charges, and profit but excludes the trader's profits. 3. Applicability of Ujagar Prints (II) and (III) vs. S. Kumars: The Tribunal did not address whether the Assessee and Heinz were related persons, which is crucial for determining the applicable valuation principle. Relevant Judgments: - Ujagar Prints (II) and (III): The assessable value of processed goods includes the value of raw material, job work charges, and manufacturing profit and expenses. - S. Kumars: If the processor and the merchant manufacturer are related, the assessable value should be determined based on the price charged by the merchant manufacturer from independent dealers. Conclusion: The Supreme Court held that the Tribunal did not adequately address whether the Assessee and Heinz were related persons. The case was remanded back to the Tribunal to examine the relationship in depth. If found unrelated, the Tribunal's decision would stand affirmed. If related, the matter would be remitted to the Adjudicating Authority for fresh determination of the assessable value according to the law. Final Judgment: The appeals were allowed, and the matter was remanded to the Tribunal for further examination of the relationship between the Assessee and Heinz. No order as to costs was made.
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