2018 (8) TMI 354 - AT - Central Excise

Manufacture - Job-work - Rule 10A(ii) of Central Excise Valuation Rules, 2000 - 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) of Central Excise Valuation Rules, 2000, the appellants are required to pay the duty on the value at which M/s ISGEC sold the goods. Held that - Identical issue decided in appellant own case SUYOG ENGINEERS PVT. LTD., YAMUNA FABRICATORS VERSUS CCE, PANCHKULA 2017 (10) TMI 893 - CESTAT CHANDIGARH , where it was held that Although we hold that the appellants are required to pay duty as per the Rule 10A(ii) of the Valuation Rules, 2000 but 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 - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against differential duty, interest, and penalties imposed on appellants for manufacturing economizer coils and super heater coils as job workers for M/s ISGEC. Interpretation of Rule 10A(ii) of Central Excise Valuation Rules, 2000. Appellants' liability to pay duty on transaction value of goods supplied to M/s ISGEC. Imposition of penalties on appellants for alleged under-valuation and intention to pay less duty.

Analysis:

1. Differential Duty, Interest, and Penalties:
The appellants challenged impugned orders demanding differential duty, interest, and penalties for manufacturing economizer and super heater coils as job workers for M/s ISGEC. The Tribunal noted that appellants received pre-bended steel tubes free of cost from M/s ISGEC, took cenvat credit of duty indicated in invoices, and cleared manufactured coils to M/s ISGEC. Allegations arose that M/s ISGEC sold goods as manufactured by appellants, triggering demand for differential duty. However, citing Rule 10A(ii) of Valuation Rules, the Tribunal held that although duty was payable as per the rule, as M/s ISGEC had already paid duty on the goods, demanding duty from appellants amounted to double taxation, impermissible by law. Consequently, the Tribunal set aside the impugned orders, ruling in favor of the appellants.

2. Interpretation of Rule 10A(ii) - Liability to Pay Duty:
The Tribunal analyzed the applicability of Rule 10A(ii) of Central Excise Valuation Rules, 2000 in the context of the appellants' case. Despite acknowledging that duty should be paid as per the rule, the Tribunal emphasized that since duty had already been paid by M/s ISGEC on the goods, no additional duty could be levied on the appellants. This interpretation prevented double taxation on the same product and aligned with legal principles against such practice. Therefore, the Tribunal concluded that the appellants were not liable to pay the demanded differential duty, ensuring a fair and lawful outcome.

3. Imposition of Penalties for Under-Valuation:
Regarding the imposition of penalties on the appellants for alleged under-valuation and intention to pay less duty, the Tribunal scrutinized the circumstances of the case. Notably, the Tribunal highlighted an agreement between the parties where M/s ISGEC undertook testing after goods were supplied by the appellants, considering it as a manufacturing activity. This understanding influenced the value calculation for duty payment. The Tribunal reasoned that since duty had been paid by M/s ISGEC on the transaction value of goods, the appellants did not intend to evade duty payment. Consequently, the Tribunal ruled that no penalty was imposable on the appellants, emphasizing the absence of fraudulent intent or under-valuation.

In conclusion, the Tribunal allowed the appeals, providing consequential relief to the appellants based on the settled issues in their favor. The detailed analysis of the differential duty, interpretation of Rule 10A(ii), and penalties imposed underscored the Tribunal's commitment to fair and just adjudication in the realm of excise valuation disputes.