2003 (1) TMI 176 - AT - Central Excise

Summary

Issues:
Assessable value determination for central excise duty on iron and steel products manufactured on job work basis for Steel Authority of India Ltd.

Analysis:
The Appeals before the Appellate Tribunal CEGAT, New Delhi involved a common issue regarding the determination of assessable value for central excise duty on iron and steel products manufactured on a job work basis for Steel Authority of India Ltd. The appellants, manufacturers of these products, received raw materials from SAIL and converted them into finished goods for sale. They paid duty based on the sale price fixed by SAIL, which was challenged through show cause notices alleging short-payment of central excise duty due to incorrect assessable value adoption.

The appellants contended that the assessable value adopted by them, based on SAIL's sale price, was higher than the correct assessable value. They argued that the assessable value should only include manufacturing cost and profit, not SAIL's profit. The Tribunal noted that the appellants were job workers for SAIL, converting semis into finished goods and selling them at prices set by SAIL. The law, as per the Ujagar Prints case, requires assessable value to cover raw material value, conversion cost, and job workers' profit, excluding the merchant's profit. Since the appellants paid duty based on SAIL's sale price, including SAIL's profit, any excess payment would not constitute under-valuation or short-levy.

After reviewing the records and arguments, the Tribunal found that the duty demands against the appellants were based on a misinterpretation of valuation principles established by the Apex Court. The Tribunal concluded that the demands were unsustainable, as the appellants had not under-valued the goods or paid less duty than due. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief to the appellants.