2005 (2) TMI 192 - AT - Central Excise

Summary

Issues:
Assessable value determination based on inclusion of brand name royalty in job work charges.

Analysis:
The case involved a dispute regarding the assessable value of goods manufactured by the respondents, who were job workers for a company, and cleared to the said company after affixing the brand name "Root Auto." The department contended that the assessable value should include a royalty charge for the brand name at a specific rate per piece. However, it was found that the respondents did not pay any consideration for the brand name to the company owning it. The Tribunal noted that the brand name value was only in the hands of the brand name owner and not the job worker, who merely affixed the brand name as per the owner's instructions. The original authority had included the brand name value in the assessable value, but the Commissioner (Appeals) rightly overruled this decision. The Tribunal concurred with the Commissioner's decision, emphasizing that since the job worker did not pay any value for the brand name, it should not be included in the assessable value of the goods. Consequently, the appeal of the Revenue was rejected.

This judgment clarifies the principle that the assessable value of goods cleared by a job worker should not include the value of the brand name affixed to the goods if the job worker did not pay any consideration for the brand name. The decision underscores the distinction between the value of the brand name, which resides with the brand name owner, and the job worker's role in merely affixing the brand name as instructed. It highlights the importance of considering whether any actual consideration was paid for the brand name in determining the assessable value. The Tribunal's analysis focused on the absence of any payment by the job worker for the brand name, leading to the conclusion that such value should not be added to the assessable value of the goods. Ultimately, the judgment emphasizes the need for a clear nexus between consideration paid and the components included in the assessable value to prevent unjust enrichment or inclusion of irrelevant factors.