2012 (7) TMI 323 - AT - Central Excise

Valuation - Demand of differential duty alleged that appellant has not included the conversion charges, charged by them for the manufacture of finished goods in the factory premises - appellant has discharged the duty liability on final products based upon the price declared by the principal manufacturer to them Held that - If the appellant in this case has discharged the duty liability, based upon the value of the product given to him by the principal manufacturer, there cannot be any further addition to the assessable value of the product, manufactured and cleared by the appellant from his factory premises In favor of assessee

Summary

Issues:
- Liability to pay differential duty for conversion charges in the manufacture of finished goods.

Analysis:
The appeal in question challenges the Order-in-appeal regarding the liability of the appellant to pay differential duty for conversion charges incurred in the manufacturing process. The central issue is whether the appellant should be held accountable for not including the conversion charges, specifically for Duvidilan Retard Capsules, in the factory premises. Upon examination of the records, it is established that the conversion charges pertain to intermediate medicaments used in the capsules, which are subsequently cleared from the factory premises. Notably, these charges are reimbursed by the principal manufacturer, indicating that they are an additional activity for which the appellant is compensated.

The appellant had already discharged the duty liability for the final products between January 17, 2001, and February 28, 2002, based on the price provided by the principal manufacturer. The counsel highlighted the assessable value calculation for excise duty payment, showing that the principal manufacturer determined the assessable value based on the product's MRP with excise duty. Given that the duty was paid based on the value provided by the principal manufacturer, any further addition to the assessable value for products manufactured and cleared by the appellant would be unwarranted. This position is supported by the precedent set in the case of Surindra Steel Rolling Mills vs. CCE, Chandigarh, as upheld by the Hon'ble High Court of Punjab & Haryana. Consequently, the appellate tribunal concluded that the impugned order should be set aside, thereby allowing the appeal.