2018 (5) TMI 661 - AT - Central Excise

Demand of differential duty - goods cleared on payment of duty were not sold by the job worker but transferred to the principal manufacturer on the basis of indent of delivery and taxes like VAT was also not shown by the job worker, but paid by the principal manufacturer - Held that - The job worker is doing the job work on the inputs received from the principal and clearing the said goods after doing the job work i.e. manufacture the AC Pipes and Couplings as per the requirement of assessee-Respondents on payment of Central Excise duty, who in turn cleared the same after fixing value as per the agreement with the buyers. The case is squarely covered by the decision of the Hon ble Supreme Court in the case of Ujagar Prints vs UOI 1988 (11) TMI 106 - SUPREME COURT OF INDIA , where it was held that value for assessment of the goods manufactured by a job worker will consist of the total of the cost of raw material, manufacturing cost and the manufacturing profit. Appeal dismissed - decided against Revenue.

Summary

Issues:
Department's appeal against Order-in-Appeal dated 07.08.2009 regarding differential duty demand on goods cleared on job work basis.

Analysis:
The Department filed an appeal against Order-in-Appeal No. 236 to 239/2009(Ahd-II)CE/CMC/Commr (A)/Ahd dated 07.08.2009, concerning the demand for differential duty on goods cleared on job work basis. The case involved M/s Apurva Vinimay Pvt. Ltd., engaged in manufacturing asbestos cement pipes and couplings on job work basis for M/s A. Infrastructure Ltd. An investigation revealed that the goods cleared on payment of duty were transferred to the principal manufacturer without being sold by the job worker, leading to a demand for differential duty from the principal manufacturer. The appellate authority allowed the claim of the assessee-Respondents, prompting the Department to file the present appeal.

During the hearing, the Department cited Circular No. 619/10/2002-CX, emphasizing the valuation principles for goods manufactured on job work basis. The Circular clarified that the assessable value for such goods includes job charges, material costs, and excludes buyer's profit or expenses. The Supreme Court's decision in Mahindra Ugine Steel Co. Ltd. Vs CCE, Pune-I reiterated the valuation rules for goods not sold but used in production, emphasizing the cost of production as the basis for valuation.

The Tribunal noted that both the job worker and the assessee-Respondents were registered with the Central Excise Department. The job worker manufactured asbestos cement pipes and couplings, while the assessee-Respondents produced asbestos cement sheets subject to Central Excise duty. The job worker cleared the goods after manufacturing them as per the principal's requirements, who then sold the goods after fixing the value. The Tribunal found the case aligned with the Supreme Court's decision in Ujagar Prints vs UOI, holding that the impugned order was sustained based on the reasons provided.

Consequently, the Tribunal dismissed the Department's appeal, affirming the Order-in-Appeal and upholding the decision regarding the differential duty demand on goods cleared on job work basis.