2000 (6) TMI 294 - AT - Central Excise

Summary

Issues Involved:
1. Determination of assessable value for goods manufactured on a job work basis.
2. Applicability of the Ujagar Prints decision.
3. Inclusion of manufacturing expenses and profit in the assessable value.

Issue-wise Detailed Analysis:

1. Determination of Assessable Value for Goods Manufactured on a Job Work Basis:
The appellant manufactures Plastic Satranj using duty-paid raw materials received from M/s. Supreme Industries and sells them on a job work basis, including manufacturing cost and profit. The Assistant Collector initially determined that the assessable value should be the price at which M/s. Supreme Industries sold the goods in the wholesale market, allowing deductions for transportation charges and Central Excise duty but disallowing deductions for loading, unloading, and marketing expenses. This decision was partly upheld by the Collector (Appeals), leading to the current appeal.

2. Applicability of the Ujagar Prints Decision:
The appellant argued that the assessable value should be based on the landed cost of raw materials plus job charges, including manufacturing expenses and profit, as supported by the Ujagar Prints decision. The Ujagar Prints case clarified that the assessable value for goods produced on a job work basis should include the cost of materials, processing charges, and the processor's profit, but not the trader's profit. The Supreme Court held that the processor's factory gate should be treated as the deemed factory gate for valuation purposes.

3. Inclusion of Manufacturing Expenses and Profit in the Assessable Value:
The appellant contended that the Commissioner (Appeals) incorrectly divided job charges into manufacturing expenses and profit, leading to an inflated assessable value. The appellant relied on various Tribunal decisions, which supported the inclusion of job charges (comprising manufacturing expenses and profit) in the assessable value. The department argued that the Ujagar Prints decision did not apply as the conditions were not met and that the assessable value should include manufacturing expenses and profit, not just job charges.

Judgment Analysis:
The Tribunal reviewed the Ujagar Prints decision and other relevant rulings, concluding that the approach of the Commissioner (Appeals) was incorrect. The Tribunal held that the assessable value should be based on the landed cost of raw materials plus job charges, including manufacturing expenses and profit, in line with the Ujagar Prints clarificatory judgment. The Tribunal found that the Assistant Collector's and Commissioner (Appeals)'s decisions did not align with established legal principles and recent Tribunal decisions.

Order:
The appeal was allowed, and the impugned order was modified. The assessable value of Satranj manufactured on a job work basis should be approved based on the landed cost of raw materials plus job charges, including manufacturing expenses and profit.