2012 (7) TMI 414 - AT - Central Excise

Calculation of assessable value of the job work goods - Department stated that assessee has not included the amount of sales tax paid on the raw material i.e. steel - Held that - It is an undisputed fact that invoice of SAIL clearly indicates the purchasers as M/s. IVCRL Infrastructures & Projects Ltd. and the appellant as a consignee, thus the amount of sales tax indicated in the invoice of SAIL cannot be included in the landed cost of the inputs/raw materials for the reason that the said cost is not incurred by the appellant herein - in favour of assessee.

Summary

Issues:
1. Whether sales tax paid by M/s. IVCRL Infrastructures & Projects Ltd. for the supply of plates/coils to a job worker should be included in the value for discharge of excise duty by the job worker.

Analysis:
The appeal in this case was against an order-in-Appeal confirming demands, interest, and penalties imposed on the appellants, who were manufacturers of seamless stainless steel tubes/pipes. The issue revolved around the inclusion of sales tax paid on raw materials in the assessable value of job work goods. The department contended that the sales tax amount indicated on the invoice of the raw material supplier should be considered in the landed cost of inputs/raw materials for excise duty discharge. The appellant argued that as a job worker, they were not the purchasers of the raw material, and sales tax should not be part of the assessable value. The Tribunal had to determine whether the sales tax paid by the principal to the raw material supplier should be included in the job worker's excise duty calculation.

The Tribunal noted that the appellant was a job worker who availed cenvat credit on the excise duty paid on raw materials supplied by the principal. It was undisputed that the appellant discharged excise duty on the finished goods to the principal. The Tribunal analyzed the arguments of both sides and examined the records to reach a decision.

The key issue for determination was whether the sales tax paid by the principal on the raw material supply should be included in the value for excise duty discharge by the job worker. The Tribunal found that the sales tax amount indicated on the invoice was for the sale to the principal, who would claim credit for the sales tax paid. The Tribunal held that the sales tax amount should not be included in the landed cost of inputs/raw materials for excise duty calculation since it was not incurred by the job worker. The Tribunal reasoned that if the principal had received the consignment and then dispatched it to the job worker, the invoice would not indicate the sales tax amount. The Tribunal referred to the Cenvat Credit Rules, stating that when inputs are removed as such, the duty credit availed on such inputs should only be reversed, which applied to job working scenarios as well.

Consequently, the Tribunal found that the lower authorities' orders were not consistent with the law and set them aside. The appeal was allowed with consequential relief, if any, in favor of the appellants.