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2023 (6) TMI 60 - AT - Central ExciseMethod of Valuation - Section 4 (1) (a) of Central Excise Act, 1944 or Rule 10A of Valuation Rules, 2000? - clearances made to M/s. Mira Textiles Industries (I) Ltd. and M/s. Mohan Breweries under the instructions of M/s. Mira - appellant was getting the kraft paper (raw material) under the cover of Central Excise invoices from M/s.Mira and after availing the credit of craft paper, the same was being converted into carton boxes (finished products) - job-work or not - Department was of the view that amount received by the appellant was only compensation of the expenditure incurred by them and received by them through the sale invoices raised. HELD THAT - It has to be noted that there is no free supply of raw materials to the appellant by M/s. Mira Textiles and it is actually purchased by raising invoices and paying the value of the raw material along with duty and applicable Sales Tax / VAT. The ownership of the raw material is therefore transferred from M/s. Mira Textiles to the appellant. Such kraft paper is used for manufacture of carton boxes which are finished product and cleared to M/s. Mira Textiles and M/s. Mohan Breweries under the instructions of M/s. Mira Textiles. The department has relied upon a statement of Shri G. Hari Hara Subramanian, General Manager of appellant-company to allege that appellant is a job worker. The documentary evidence in the nature of invoices for purchase of raw materials, invoices for clearances of finished products indicate that the appellant is an independent manufacturer. Documentary evidence prevails over oral statement which is not put to the test of examination and cross-examination as required under Section 9D. There is no evidence to support the case of the department. It clearly shows that the appellant has purchased raw materials and used them for manufacture of carton boxes as an independent manufacturer. Similar issue was considered by the Tribunal in the case of COROMANDEL PAINTS LTD. VERSUS COMMISSIONER OF C. EX., VISAKHAPATNAM 2010 (9) TMI 315 - CESTAT, BANGALORE where it was held that merely indicating the vendors of the raw materials or by giving advance money for procurement of such materials or installing the equipments giving by the SIPL would not render the appellant as a job worker. T he demand cannot sustain. Impugned order is set aside - Appeal allowed.
Issues Involved:
1. Whether the appellant is a job worker for M/s. Mira Textiles. 2. Whether the valuation adopted by the appellant is correct under Section 4(1)(a) of the Central Excise Act, 1944. 3. Whether Rule 10A of the Central Excise Valuation Rules, 2000 applies. 4. Whether the extended period for issuing the show cause notice is applicable. Summary: 1. Job Worker Status: The department alleged that the appellant acted as a job worker for M/s. Mira Textiles, as the kraft paper (raw material) was supplied by M/s. Mira Textiles. The appellant contended that they purchased the kraft paper, and the ownership of the raw material was transferred to them. The finished products (carton boxes) were sold to M/s. Mira Textiles, indicating an independent manufacturer status. The Tribunal noted that there was no free supply of raw materials and the ownership was indeed transferred, thus the appellant was not a job worker. 2. Valuation under Section 4(1)(a): The appellant argued that they satisfied all conditions under Section 4(1)(a) of the Central Excise Act, 1944, which includes the finished goods being sold for delivery at the time and place of removal, the seller and buyer not being related, and the price being the sole consideration for the sale. The Tribunal found that the appellant met these conditions and that the valuation was correctly adopted as per Section 4(1)(a). 3. Applicability of Rule 10A: The department invoked Rule 10A of the Central Excise Valuation Rules, 2000, which applies when goods are manufactured by a job worker on behalf of a principal manufacturer. The Tribunal held that Rule 10A was not applicable as the appellant was not a job worker, and the goods were not manufactured on behalf of M/s. Mira Textiles. The documentary evidence supported the appellant's claim of being an independent manufacturer. 4. Extended Period for Show Cause Notice: The department issued a show cause notice invoking the extended period, alleging suppression of facts with intent to evade duty. The appellant contended that there was no suppression as they had filed periodical returns and accounted for the raw materials and finished products properly. The Tribunal found no evidence of suppression or intent to evade duty, rendering the show cause notice time-barred. Conclusion: The Tribunal set aside the impugned order, concluding that the appellant was an independent manufacturer, the valuation under Section 4(1)(a) was correct, Rule 10A was not applicable, and the extended period for issuing the show cause notice was not justified. The appeal was allowed with consequential relief.
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