2002 (6) TMI 123 - AT - Central Excise

Summary

Issues:
1. Assessment of excise duty based on resale price
2. Nature of relationship between parties in job work agreement
3. Applicability of previous tribunal and Supreme Court judgments

Assessment of excise duty based on resale price:
The appeal was filed against the adjudication order passed by the Commissioner of Central Excise. The case involved M/s. Valvoline Cummins Ltd. engaging in trading lubricating preparations and entering into an agreement with M/s. Ultra Lubricants (India) Pvt. Limited for manufacturing and supplying lubricating preparations on a job work basis. The dispute arose regarding the assessable value based on the resale price to customers. The Commissioner relied on a previous tribunal decision in the case of Pawan Biscuit Company (P) Ltd. v. Collector of Central Excise, which was later set aside by the Supreme Court in the case of Pawan Biscuits Co. Pvt. Ltd. v. Collector of Central Excise, Patna. The Commissioner's order was set aside, and penalties were also revoked, ultimately allowing the appeals.

Nature of relationship between parties in job work agreement:
The contention between the appellants and the Revenue was centered on the nature of the relationship between M/s. Ultra Lubricants (India) Pvt. Limited and M/s. Valvoline Cummins Ltd. The Commissioner, following the tribunal's decision in the Pawan Biscuit Company case, deemed the relationship as that of an agent and principal, rather than principal to principal. However, the Supreme Court's ruling in the Pawan Biscuits case clarified that the relationship between parties in job work agreements should be considered on a principal to principal basis. This clarification, along with the applicability of processing charges and inclusion of raw material costs, led to the set aside of the Commissioner's decision.

Applicability of previous tribunal and Supreme Court judgments:
The judgment highlighted the significance of previous tribunal and Supreme Court decisions in similar cases. The Tribunal's decision in the Pawan Biscuit Company case, which influenced the Commissioner's order, was overturned by the Supreme Court in the Pawan Biscuits case. The Supreme Court emphasized the principal to principal relationship in job work agreements and the inclusion of processing charges and raw material costs for excise duty assessment. The appellants' compliance with the Supreme Court's ruling based on the Ujagar Prints case was acknowledged, leading to the setting aside of the Commissioner's decision and penalties, thereby allowing the appeals.