1996 (12) TMI 145 - AT - Central Excise

Summary

Issues involved: Assessment of assessable value and duty payable on goods manufactured as job worker basis, applicability of Central Excise (Valuation) Rules, 1975, comparison of goods produced by the appellant for own account and on job work basis, time limitation for show cause notices.

Assessment of assessable value and duty payable: The appellant, engaged in manufacturing aluminium strips sheets, faced a dispute regarding the assessable value and duty on goods manufactured as a job worker. The Price Lists submitted by the appellant indicated assessable value based on the total cost of raw materials and job work charges supported by Costing Certificates. The dispute arose due to show cause notices challenging the assessable value calculation based on wholesale prices of goods manufactured on job work basis compared to goods sold by the appellant. The adjudicating authority and Collector (Appeals) upheld the demand, but the Tribunal found the demand unsustainable as the goods were manufactured from raw materials supplied by the supplier and returned to them, thus determining the assessable value based on cost of raw materials, labour charges, and profit as per the Ujagar Prints case.

Applicability of Central Excise (Valuation) Rules, 1975: The expression "comparable goods" from Rule 6(b)(i) of the Rules was used by lower authorities to determine assessable value. However, Rule 6(b) applies when goods are not sold but used in the production of another article, which was not the case here as the goods were returned to the supplier. Therefore, the Tribunal found that the valuation method based on cost of raw materials, labour charges, and profit was appropriate, as supported by the costing data provided by the appellant, including job work charges covering labour charges and profit element.

Time limitation for show cause notices: The appellant contended that the show cause notices were time-barred, but the adjudicating authority overruled this. While the Collector (Appeals) sustained the demand for a specific period, the Tribunal ultimately set aside the impugned orders, allowing the appeal in favor of the appellant.