2016 (12) TMI 788 - AT - Central Excise

Valuation - cost construction method - job work - We find that there is no dispute about the method of valuation to be done in respect of job work goods of the appellant i.e. as per the principle laid down in the Hon ble Supreme Court judgement in the case of Ujagar Prints Etc.Etc. Vs. Union of India & Others 1989 (1) TMI 124 - SUPREME COURT OF INDIA . The only dispute raised by the lower authority is the quantum of cost of manufacture - cost of DEO - cost of packing material - Held that - From the certificate of Chartered Accountant, it is clear that the cost of DEO at Sr. No. 19 and packing material at Sr. No. 20 was included. We find that job charges of ₹ 103/- per kg. added which as per the agreement between the appellant and the principal supplier of the raw material - it is clear that the job charges is ₹ 103/- per kg., therefore there is no reason to take the job charges as ₹ 109/- per kg. In view of the above facts, it is very clear that the entire basis for rejecting the value declared by the appellant is factually incorrect. We, therefore, find that the valuation was done by the appellant and certified by the Chartered Accountant in the above referred certificate is correct. Accordingly, the impugned order does not survive, hence the same is set aside - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Valuation of job work goods based on Ujagar Prints case principles, rejection of Chartered Accountant certificate by lower authority, inclusion of cost elements in the valuation, dispute over job charges rate.

Valuation of Job Work Goods:
The case involved the valuation of job work goods manufactured by the appellant, guided by the principles set by the Supreme Court in the Ujagar Prints case. The dispute primarily revolved around the quantum of the cost of manufacture, with the lower authority challenging the Chartered Accountant certificate's validity. The certificate included the cost of DEO and packing material, essential elements in the valuation process. The job charges rate was a point of contention, with the lower authority claiming discrepancies. However, the agreement between the appellant and the principal supplier clearly stated the job charges as ?103 per kg, contradicting the lower authority's argument of ?109 per kg. The Tribunal found the valuation method followed by the appellant, as certified by the Chartered Accountant, to be accurate and in compliance with the Ujagar Prints principles. As a result, the impugned order was set aside, and the appeal was allowed.

Rejection of Chartered Accountant Certificate:
The lower authority rejected the Chartered Accountant certificate provided by the appellant, citing missing elements in the cost calculation. However, upon careful examination of the certificate, it was evident that the cost of DEO and packing material was indeed included. The Tribunal found the certificate to be comprehensive and accurate, supporting the appellant's valuation method. The rejection of the certificate by the lower authority was deemed factually incorrect, leading to the setting aside of the impugned order.

Inclusion of Cost Elements:
One of the key points of contention was the inclusion of all relevant cost elements in the valuation process. The lower authority argued that certain elements, such as the cost of DEO and packing material, were not added to the cost of production. However, the Chartered Accountant certificate clearly indicated the inclusion of these elements, validating the appellant's valuation approach. The Tribunal emphasized the importance of considering all cost components in the valuation to ensure accuracy and compliance with legal standards.

Dispute Over Job Charges Rate:
A significant aspect of the case was the dispute over the job charges rate applied in the valuation process. The appellant contended that the job charges rate of ?103 per kg, as per the agreement with the principal supplier, was accurate. The lower authority, however, insisted on a rate of ?109 per kg, leading to discrepancies in the valuation. By referencing the agreement clause specifying the job charges rate, the Tribunal clarified that the rate of ?103 per kg was correct. Resolving this dispute was crucial in determining the accuracy of the valuation and ultimately led to the setting aside of the impugned order.