2016 (12) TMI 1258 - AT - Central Excise

Valuation - Held that - there is no provision of law for including the value of goods received for job work into value of the goods manufactured by a manufacturer. The job work is separately covered by Notification No. 214 of 1986 - The goods received from job worker are returned to the principal and if the goods are returned to the principal by endorsement on the reverse of the Challans the transaction is completed - Appeal allowed - decided in favor of the assessee.

Summary

Issues: Valuation of goods for job work, inclusion in assessable value, applicability of Notification No. 214/1986, challenge to show cause notices.

In the case, the appellant received goods for job work from the principal and returned them after the job work. The Revenue contended that the valuation of the outer component should include the value of the job work received. Show cause notices were issued demanding excise duty, penalty, and interest. The Tribunal considered the contentions and found no provision in law to include the value of job work in the manufactured goods' value. It was noted that job work is covered by Notification No. 214 of 1986, exempting job workers from excise duty payment. The Tribunal emphasized that the principal manufacturer is responsible for excise duty on goods emerging from job work. The Tribunal ruled in favor of the appellant, stating that the show cause notices were ill-conceived and unsustainable, allowing the appeals with consequential relief if any.

The main contention was the inclusion of job work value in the assessable value of goods cleared by the appellant. The Tribunal highlighted the absence of a legal provision for such inclusion, citing Notification No. 214/1986 covering job work and exempting job workers from excise duty payment. The Tribunal emphasized the principal manufacturer's duty to pay excise duty on goods from job work, concluding that the show cause notices were not sustainable.

The Department relied on a Supreme Court ruling in Union of India vs. J.G. Glass Industries Ltd. (1998) to support their position. However, the Tribunal found that this case law was not directly applicable to the current scenario. The Tribunal noted the elaborate procedure under Notification No. 214/1986 for job work, emphasizing the absence of a provision in Central Excise Law to include job work value in manufactured goods' value. Consequently, the Tribunal held that the show cause notices were ill-conceived and allowed the appeals with any consequential relief.