2018 (4) TMI 1153 - AT - Central Excise

Valuation - job-work - it was alleged that M/s ISGEC is selling the goods as such as the appellants have manufactured the goods in complete form, therefore, in terms of Rule 10A(ii), the appellants are required to pay the duty on the value at which M/s ISGEC sold the goods - Rule 10A (ii) of Central Excise Valuation Rules, 2000 - Held that - identical issue decided in the case of Suyog Engineers Pvt. Ltd., Yamuna Fabricators Versus CCE, Panchkula 2017 (10) TMI 893 - CESTAT CHANDIGARH , where it was held that on the amount on which duty have been demanded from the appellants, duty has already been paid by the M/s ISGEC on the said amount. If the duty has been demanded from the appellant, in that circumstances, it will be the case of demand of duty twice on the same product which is not permissible in law - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against differential duty, interest, and penalty imposed on the appellant for manufacturing economizer coils and super heater coils.

Analysis:
1. Differential Duty and Interest:
- The appellant was a job worker for M/s ISGEC, receiving pre-bended steel tubes with duty-paid invoices. They claimed cenvat credit for the duty indicated in the invoices and cleared the manufactured coils to M/s ISGEC on payment of duty.
- Allegations arose that the appellants should pay duty based on the value at which M/s ISGEC sold the goods, invoking Rule 10A (ii) of Central Excise Valuation Rules, 2000.
- The Tribunal noted a previous case where it was held that while duty was payable as per the rule, it could not be demanded twice on the same product. Since duty had already been paid by M/s ISGEC on the goods, no additional duty was payable by the appellants.

2. Penalty Imposition:
- The Tribunal considered that M/s ISGEC's testing activity post-supply amounted to manufacturing under the Central Excise Tariff Act. The appellants cleared goods to M/s ISGEC based on job charges plus raw material value, as agreed.
- It was established that there was no intention to underpay duty, as M/s ISGEC had paid duty on the transaction value of the goods. Therefore, the Tribunal ruled that no penalty was imposable on the appellants.

3. Precedent Decision and Relief:
- Due to a previous ruling by the Tribunal on a similar issue, the impugned order was set aside, and the appeal was allowed with consequential relief.

This judgment clarifies the duty liability of job workers in cases where the principal manufacturer has already paid duty on the transaction value of the goods. It also emphasizes the importance of considering the specific circumstances and agreements between parties to determine the imposition of penalties for duty payment discrepancies.