2008 (4) TMI 318 - SC - Central Excise

Valuation of goods - Job work - Place of removal - amendment in the definition of the expression place of removal - Discrepancy in price declared by the assessee and price at which goods sold - Held that - if an independent job worker processes the goods and returns it back to the supplier of the goods the prescription of other place of removal in the Budget will not make any difference in such cases - Tribunal rightly concluded that the amendment carried out in the definition of the expression place of removal insofar as the facts of this case are concerned will not make any difference - The assessee is a job worker. Raw material is supplied to it and after processing the manufactured product is sent back to the depots of the supplier viz. Hindustan Lever Ltd. For such products valuation can be done on the basis of price of comparable goods under Rule 6(b)(i) or failing that under Rule 6(b)(ii) of the Valuation Rules on the basis of the cost of manufacture plus notional profit in order to arrive at the nearest ascertainable equivalent of the price stipulated under Section 4(1)(a) as contemplated under Section 4(1)(b) of the Central Excise Act 1944 - Decided against Commissioner.

Summary

Issues:
1. Assessment of central excise duty on manufactured goods.
2. Valuation of goods for charging excise duty.
3. Interpretation of the definition of 'place of removal' in central excise laws.
4. Application of Circular No. 251/85/96-CS in determining excise duty liability.

Analysis:
1. The assessee, engaged in manufacturing detergent and scouring powder, carried out the activity on a job work basis for their principal. The central excise duty was demanded based on the value of goods declared by the assessee in the RT-12 returns, which was found to be lower than the actual selling price. Show cause notices were issued for recovery of duty and imposition of penalties under relevant sections of the Act.

2. The adjudicating authority and Commissioner (Appeals) confirmed the demand of differential duty and penalties, stating that excise duty on the scouring powder was required under Section 4 of the Act, and for detergent under Section 4A. The valuation of goods for excise duty purposes was a key issue, especially in the absence of depot sale prices provided by the assessee.

3. The Tribunal set aside the lower authorities' orders, citing Circular No. 251/85/96-CS, which clarified the definition of 'place of removal' in cases where an independent job worker processes goods and returns them to the supplier. The Tribunal held that the amendment in the definition of 'place of removal' did not impact the present case, emphasizing that the job worker's role and the return of processed goods to the supplier's depots were crucial factors.

4. The Tribunal highlighted the valuation rules for job workers like the assessee, emphasizing the methods for determining the assessable value of goods for excise duty purposes. Valuation could be based on the price of comparable goods or the cost of manufacture plus notional profit, as per the Valuation Rules and Central Excise Act provisions.

5. Ultimately, the Supreme Court dismissed the appeal, upholding the Tribunal's decision based on the facts and circumstances of the case. The Court declined to interfere with the Tribunal's order, emphasizing the valuation principles and the application of Circular No. 251/85/96-CS in determining the excise duty liability.