2024 (2) TMI 435 - AT - Central Excise

Valuation - inclusion of value of free material supplied by the principal manufacturer for the purpose of job work by the respondent on behalf of the supplier of the material or not - HELD THAT - On the close scrutiny of the order it is found that the learned Adjudicating Authority has assumed that the principal manufacturer has discharged the duty on the total value of the finished product cleared by the principal manufacturer. However, no verification in this regard was made by the Adjudicating Authority. Since the INTERNATIONAL AUTO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BIHAR 2005 (3) TMI 132 - SUPREME COURT case is solely based on the fact that the principal manufacturer has adjusted the duty while clearing the final product but in absence of said fact on record in the present case, reliance placed on International Auto Ltd only would not be proper. Accordingly, for applying the ratio of International Auto Ltd the fact needs to be verified that whether the principal manufacturer has paid the duty on the total value of the final product including the value of the material supplied by the principal manufacturer to the job worker in the present case. Therefore, the matter needs to be remanded back to the Adjudicating Authority for passing a fresh order. Appeal is allowed by way of remand to the Adjudicating Authority.

Summary

Issues Involved:
The issue involved is whether the respondent is liable to include the value of free material supplied by the principal manufacturer for the purpose of job work by the respondent on behalf of the supplier of the material.

Judgment Details:

Issue 1: Inclusion of value of free material in job work:

The Revenue's appeal questioned the dropping of proceedings based on a Supreme Court judgment. The Revenue argued that the duty payment by the principal manufacturer was not verified in the present case, unlike the situation in the cited judgment. On the other hand, the Respondent contended that the facts in this case align with the case law cited and that no interference should be made in the order. The Adjudicating Authority assumed the duty payment by the principal manufacturer without verification. The Tribunal noted that for applying the precedent, verification of whether the principal manufacturer paid duty on the total value of the final product, including the supplied material, is crucial. As such, the matter was remanded back to the Adjudicating Authority for a fresh order based on this observation.

The impugned order was set aside, and the appeal was allowed for remand to the Adjudicating Authority for further proceedings.