2017 (6) TMI 678 - AT - Central Excise

Maintainability of appeal - appeal to appellate tribunal - Valuation - job work - manufacture of malt extract and barley malt which has been cleared to M/s.Smithkline Beecham Consumer Healthcare on job work basis - Revenue is of the view that the assessable value is to be determined on the basis of price charged by the appellant to their independent buyers/consumers as per Rule 6 (b) (i) of the Central Excise Valuation Rules, 1975 - Whether the issue of valuation of the goods manufactured on job work basis can be raised in this appeal or not? - Held that - reliance placed in the case of MIL India Ltd. 2003 (10) TMI 100 - CESTAT, NEW DELHI , where it was held that the appellant is having right to agitate the issue of applicability of Rule 6 (b) (i) in the appeal pending before us. Whether the provision of Rule 6(b) (i) of the Valuation Rules are applicable to the facts of the present case or not? - Held that - On bare reading of the said provisions of the Rule 6, the said provisions are applicable to the goods which are not sold but are used or consumed by the assessee himself or on his behalf in the production or manufacture of other articles - Admittedly, in this case, the appellant is a job worker and job worked goods have been sent to the principal manufacturer. In that circumstance, although the goods were not sold by the appellant but are not used and consumed by the assessee himself or on his behalf in the production or manufacture of other articles. In that circumstance, the provisions of Rule 6 (b) (i) of the Valuation Rules are not attracted. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the issue of valuation of the goods manufactured on a job work basis can be raised in this appeal.
2. Whether the provisions of Rule 6(b)(i) of the Central Excise Valuation Rules, 1975 are applicable to the facts of the present case.

Issue-Wise Detailed Analysis:

Issue 1: Whether the issue of valuation of the goods manufactured on a job work basis can be raised in this appeal.

The Tribunal initially remanded the matter to the Commissioner (Appeals) to decide whether the goods are comparable. The Commissioner (Appeals) found the goods comparable and invoked Rule 6(b)(i) of the Valuation Rules. However, the Tribunal noted that the Commissioner (Appeals) did not explain how Rule 6(b)(i) applied to the case. The Tribunal referenced the Supreme Court's judgment in Hindustan Lever Ltd., which stated that a higher court is not bound by the findings of lower authorities. The Tribunal also cited its own decision in MIL India Ltd., which was affirmed by the Supreme Court, supporting the appellant's right to raise the issue of the applicability of Rule 6(b)(i) at any stage. Therefore, the Tribunal held that the appellant could contest the applicability of Rule 6(b)(i) in the current appeal, and this issue was resolved in favor of the appellant.

Issue 2: Whether the provisions of Rule 6(b)(i) of the Central Excise Valuation Rules, 1975 are applicable to the facts of the present case.

Rule 6(b)(i) applies when excisable goods are not sold but are used or consumed by the assessee in the production of other articles. In this case, the appellant, a job worker, sent the job-worked goods to the principal manufacturer, and the goods were not used or consumed by the appellant. The Tribunal referenced the Kandivali Metal Works case, which clarified that Rule 6(b)(i) does not apply when goods are returned to the supplier after job work. This view was affirmed by the Supreme Court. The Tribunal also noted that the decision in India Carbon Ltd. was remanded by the Supreme Court and thus not relevant. Additionally, the Tribunal found that in the appellant's own case for a subsequent period, it was held that Rule 6(b)(i) did not apply. Consequently, the Tribunal concluded that the appellant correctly valued the goods based on costing and that Rule 6(b)(i) was not applicable. This issue was also resolved in favor of the appellant.

Conclusion:

The Tribunal concluded that the appellant could raise the issue of valuation in the current appeal and that Rule 6(b)(i) of the Valuation Rules did not apply to the facts of the case. The impugned order was set aside, and the appeal was allowed with consequential relief.