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2014 (12) TMI 945 - AT - Central ExciseValuation of goods - Job work - addition of value of scrap - duty liability has been discharged on the price at which the job-worked goods were sold by the principal manufacturer - Held that - Appellant has discharged the duty on the sale price of M/s SAIL, which was the principal manufacturer. Therefore, the provision of sub-rule (i) of Rule 10A is clearly attracted. Only in a case where the sub-rule (i) & (ii) are not attracted, the transaction can be covered to sub-rule (iii) of Rule 10(A) - As regards the transaction pertaining to M/s KEC International and M/s RPG Transmission Ltd., the demand pertained to the period April, 2007 to December, 2010, whereas the show-cause notice has been issued only on 27.7.2011. Therefore, the demand for the period April, 2007 to June, 2010 would be clearly time barred and the demand cannot be sustained in law. We further see that the appellant has discharged the duty liability on the scrap, which has been generated and the transaction could have been undertaken under Rule 4(5)(a) of the Cenvat Credit Rules. If the appellant had followed the said procedure instead of paying duty, the question of inclusion or exclusion of value of the scrap would not have arisen at all. In these circumstances, the question of addition to value of scrap, is not sustainable. - Decided in favour of assessee.
Issues:
1. Duty demand confirmation along with penalty imposition on the appellant. 2. Interpretation of Rule 10A of the Central Excise Valuation Rules, 2000. 3. Applicability of Rule 10A(i) and Rule 10A(iii) in determining duty liability. 4. Time-barred demand for the period April 2007 to June 2010. 5. Discharge of duty liability on scrap generated in transactions with M/s KEC International Ltd. and M/s RPG Transmission Ltd. Analysis: 1. The judgment concerns an appeal against an Order-in-Original confirming a duty demand of Rs. 64,22,006/- along with penalties on the appellant, M/s Shilpa Steel & Power Ltd. The appellant undertook job-work for various clients and the majority of the demand pertained to job-work for M/s SAIL. The appellant contended that they discharged duty liability based on the price at which goods were sold by the principal manufacturer, M/s SAIL, and argued that the demand related to the transaction with M/s SAIL was unsustainable in law. 2. The key issue revolved around the interpretation of Rule 10A of the Central Excise Valuation Rules, 2000. The appellant claimed that their duty liability was discharged in accordance with Rule 10A(i) as they priced the job-worked goods based on the sale price by M/s SAIL. The adjudicating authority, however, applied Rule 10A(iii) to determine duty liability. The Tribunal analyzed the rules and concluded that Rule 10A(i) was applicable in the case of goods sold by the principal manufacturer at the time of removal, thus setting aside the demand related to the transaction with M/s SAIL. 3. Regarding transactions with M/s KEC International Ltd. and RPG Transmission Ltd., the demand covered the period from April 2007 to December 2010, with a show-cause notice issued in July 2011. The Tribunal deemed the demand for the period up to June 2010 as time-barred. It was noted that the appellant had discharged duty liability on scrap generated, which could have been managed under Rule 4(5)(a) of the Cenvat Credit Rules. By following this procedure, the issue of including or excluding the scrap value would not have arisen, leading to the setting aside of the demand for these transactions as well. 4. In conclusion, the Tribunal set aside the impugned order, allowing the appeal and providing consequential relief as per the law. The judgment highlighted the correct application of Rule 10A in determining duty liability and addressed the time-barred nature of certain demands, emphasizing compliance with relevant rules to avoid unnecessary disputes.
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