2018 (1) TMI 639 - AT - Central Excise

Valuation - job-work - includibility - expenses incurred on Inward transport charges, Insurance charges, Overheads etc. incurred by the supplier - Held that - what needs to be included in the assessable value for the purpose of job work is the value at the hands of the job worker and that what obviously include the expenses incurred for bringing the goods to the job worker - identical issue decided in the case of NELLAI CONCRETE PRODUCTS & CO. P. LTD. Versus COMMR. OF C. EX., TIRUNELVELI 2011 (10) TMI 531 - CESTAT CHENNAI , where it was held that the freight incurred for transporting the raw materials to the premises of the appellant stands correctly included for determining the duty amount. Time limitation - Held that - the claim of bona fide belief cannot be sustained - extended period rightly invoked. Appeal dismissed - decided against appellant.

Summary

Issues: Appeal against demand of duty on items manufactured on job work basis and imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:

1. Valuation of Assessable Value:
The appellant contended that expenses like Inward transport charges, Insurance charges, and Overheads incurred by the supplier should not be included in the assessable value, citing CBEC Circular No. 619/10/2002-CX. The appellant relied on Rule 6 of the Valuation Rules, 2000, stating that only the value of goods should be included. However, the respondent argued that such overheads are includible based on precedents like the case of Eicher Motors Ltd. vs. Commissioner of C.Ex., Indore. The Tribunal analyzed the issue and emphasized that for determining the assessable value, what matters is the value and not the cost. The Tribunal referred to previous decisions and highlighted that the value at the hands of the job worker should include expenses incurred in bringing the goods. Citing judgments like Reddy & Sons and Nellai Concrete Products & Co. Pvt. Ltd., the Tribunal dismissed the appeal, affirming the inclusion of such expenses in the assessable value.

2. Limitation Issue:
The appellant raised the issue of limitation, claiming a bona fide belief that the costs were not includible in the assessable value before the clarification by CBEC Circular on 1.7.2002. However, the Tribunal noted that the valuation issue had been a subject of dispute until the Hon’ble Apex Court's decision in the case of Ujagar Prints, which settled the controversy. Therefore, the claim of a bona fide belief was rejected, and the appeal on grounds of limitation was also dismissed. Ultimately, the appeal was dismissed by the Tribunal, upholding the demand of duty and penalty under the Central Excise Act, 1944.

In conclusion, the Tribunal's judgment clarified the inclusion of expenses in the assessable value for job work, emphasizing the importance of value over cost. The decision highlighted relevant legal precedents and settled the valuation dispute, ultimately dismissing the appeal based on the established principles and legal interpretations.