1996 (1) TMI 474 - AT - Central Excise

Summary

Issues:
1. Assessment of excise duty on finished products supplied by a job worker.
2. Applicability of the Supreme Court's Ujagar Prints case judgments.
3. Determination of assessable value based on raw materials, job work, and manufacturing expenses.
4. Comparison with previous court decisions on similar issues.
5. Interpretation of the relationship between supplier and processor in the context of excise duty assessment.

Analysis:
1. The case involves the assessment of excise duty on finished products supplied by a job worker. M/s. Procter & Gamble India Ltd. supplied raw materials to a respondent who converted them into finished products. The dispute arose when the Assistant Commissioner sought to fix the assessable value based on the selling price of M/s. Procter & Gamble India Ltd., which was higher than the declared value in the price list submitted by the respondent. The Collector (Appeals) directed the value to be fixed based on the declared price list, a decision not challenged by the respondent.

2. The judgment in the Ujagar Prints case by the Supreme Court clarified the assessment of excise duty on processed goods supplied by a processor. The court established the principle of deemed sale at the factory gate of the processor, considering factors such as raw material value, job work, manufacturing profit, and expenses. The clarificatory order further specified that the assessable value should include only the sum total of these elements, excluding any additional costs.

3. The Tribunal relied on the Ujagar Prints case and subsequent clarificatory order to determine the assessable value in the present case. The value was to be calculated based on the raw materials, job work, manufacturing profit, and expenses, in line with the principles outlined by the Supreme Court. This approach was supported by previous decisions of the Madras and Gujarat High Courts, reinforcing the consistent application of the legal principles in excise duty assessment cases.

4. The Tribunal distinguished its decision from previous cases where the relationship between the supplier and processor was considered that of principal and agent, leading to a different assessment of excise duty. In the present case, the Tribunal found the relationship to align with the principles set forth in the Ujagar Prints case, emphasizing the importance of correctly interpreting the nature of the relationship for excise duty assessment purposes.

5. Ultimately, the Tribunal dismissed the appeal, upholding the assessment based on the principles established in the Ujagar Prints case and the clarificatory order. The decision highlighted the significance of consistent application of legal principles in excise duty assessment cases and emphasized the necessity of aligning assessments with established legal precedents to ensure fairness and accuracy in determining assessable values.