2002 (1) TMI 111 - AT - Central Excise

Summary

Issues: Valuation of goods manufactured on job work basis

In this judgment by the Appellate Tribunal CEGAT, Bangalore, two appeals were filed by M/s. Loharu Steel Industries Ltd. regarding the determination of the value of goods manufactured on job work basis. The dispute arose when the assessee, engaged in manufacturing steel products, was alleged to have not determined the value of goods on the basis of normal price applied to goods sold at their factory gate. The main issue was whether the ex-factory wholesale price of goods manufactured by the appellant on their own account should be adopted as the basis for determining the value of goods manufactured on job work basis. The Tribunal considered the arguments presented by both parties and analyzed relevant case laws to arrive at a decision.

The first issue addressed in the judgment was the contention raised by the assessee that the selling price declared by the raw material supplier should be adopted as the assessable value for goods manufactured on job work basis. The assessee relied on the Supreme Court ruling in the case of Ujagar Prints and cited precedents where the Tribunal had consistently followed this approach. The Tribunal examined the applicability of this principle and the relevance of adopting the supplier's selling price as the assessable value, considering the specific circumstances of the case.

The second issue involved the argument put forth by the Revenue that the ex-factory wholesale price at which the goods were cleared by the appellant for their own goods should be the basis for determining the value of goods manufactured on job work basis. The Revenue contended that case law development focused on Rule 6B of Central Excise Valuation Rules and highlighted previous Tribunal decisions to support their position. The Tribunal analyzed the applicability of Rule 6B and the relevance of using ex-factory wholesale price in such valuation scenarios.

After careful consideration of the arguments presented by both parties, the Tribunal delved into the interpretation of Section 4 of the Central Excise Act regarding the determination of the normal price for the purpose of duty. The Tribunal referred to the Supreme Court judgment in the case of Ujagar Prints to establish the principles governing the valuation of goods manufactured on job work basis. The Tribunal emphasized the distinction between including the trader's profit margin in the value of goods and the necessity to adopt the selling price declared by the raw material supplier in such cases.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the appeals and holding that the practice followed by the job worker in adopting the trader's price for goods manufactured on job work basis was in compliance with the principles laid down by the Supreme Court. The Tribunal emphasized that the value of goods should be determined as per the ruling in the Ujagar Prints case, and there was no justification to raise a demand in respect of goods manufactured on job work basis. The judgment highlighted the importance of adhering to legal principles in determining the assessable value of goods in such scenarios.