2019 (1) TMI 370 - AT - Central Excise

Valuation - Job-work - value adopted as per M/s Ujagar Prints case 1989 (1) TMI 124 - SUPREME COURT OF INDIA i.e. raw material cost job charges - case of appellant is that the same goods were sold by the appellant to various buyers, when the sale price of same goods is available which is manufactured on job work basis, the sale price will apply instead of the value adopted in principle of M/s Ujagar Prints - allowability of transport cost - Held that - The excise duty liability should be computed considering the sale value charged to the independent customers as the assessable value for the purpose of valuation of job worked goods. Since, the said value is in accordance with Section 4, the permissible deduction such as transportation is also available to the appellant. CENVAT Credit - Held that - The goods of the said invoices were admittedly used by the appellant for job work. The same has been endorsed by the department by taking cost of raw material from the same invoices. In this position merely because the name of the appellant is not appearing on the invoices, Cenvat Credit cannot be denied - credit allowed. The valuation of job worked goods computed by the department on the basis of cost of raw material job work charges is incorrect. Therefore, the adjudicating authority must re-quantify the duty on the value arriving on the basis of sale price of tin container applied to the independent buyer - ppellant is also entitled for deduction of transportation in accordance with law - CENVAT credit also allowed - appeal allowed by way of remand for the purpose of re-quantification of demand.

Summary

Issues:
1. Eligibility for SSI exemption under Notification No. 08/2003-CE.
2. Calculation of duty on job work basis.
3. Denial of Cenvat credit on invoices.
4. Limitation regarding suppression of facts.
5. Applicability of valuation rules and judgments.

Eligibility for SSI Exemption:
The appellants, engaged in manufacturing metal tin containers, did not contest the clubbing of sales turnover as per Notification No. 08/2003-CE. The exemption applies to the total value of clearances by one or more manufacturers from one factory. The demand on the ground of eligibility for SSI exemption was not contested by the appellant.

Calculation of Duty on Job Work Basis:
The adjudicating authority calculated duty based on raw material cost + job charges. The appellant argued that the sale price of the goods sold to buyers should be considered, as per the judgment in the case of M/s Ispat Industries. The Tribunal agreed that the excise duty liability should be computed based on the sale value to independent customers, allowing deductions such as transportation costs.

Denial of Cenvat Credit on Invoices:
The department denied Cenvat credit as the appellant's name was not on the invoices. However, since the goods from the invoices were used for job work, the credit was deemed admissible. Even though the invoices were in the principal manufacturer's name, credit on tin plates used for manufacturing job worked goods was allowed.

Limitation Regarding Suppression of Facts:
The appellant argued that since one unit was registered in the same premise, there was no suppression of facts warranting an extended period for demand. The Tribunal found that malafide intention could not be attributed to the appellant, leading to the setting aside of penalties imposed by the adjudicating authority.

Applicability of Valuation Rules and Judgments:
The Tribunal held that the valuation of job worked goods based on raw material cost + job work charges was incorrect. The duty should be re-quantified based on the sale price of tin containers to independent buyers, allowing deductions and Cenvat credit on raw materials. The judgment in the case of M/s Loharu Steel Industries was deemed inapplicable due to changes in Section 4 and Valuation Rules, 2000, along with the existence of a relevant Larger Bench judgment. The appeals were partly allowed, remanding the case to the adjudicating authority for re-quantification.