2001 (3) TMI 756 - AT - Central Excise

Issues:
1. Interpretation of valuation rules for job workers.
2. Determination of assessable value for job workers.
3. Applicability of commercial transaction in valuation.
4. Consideration of Supreme Court judgments in valuation disputes.
5. Relevance of circulars and tribunal judgments in assessing value.

Interpretation of Valuation Rules for Job Workers:
The Revenue appealed against the C.C.E (Appeals) order, arguing that the Assistant Commissioner's insistence on determining the normal price for job workers solely based on Rule 7 of the valuation rules was incorrect. The C.C.E (Appeals) noted that the Hon'ble Supreme Court's decision in the case of M/s. Ujagar Prints did not render Section 4 (1) (a) inapplicable to job workers. In the Ujagar Prints case, the Supreme Court rejected the contention that only conversion charges should determine the price, emphasizing the need to consider intrinsic value (conversion charges + raw material cost + job worker's profit). The Assistant Commissioner failed to apply this ratio in the present case, where the job worker had independent buyers, leading to the acceptance of the price declared by the assessee for the materials supplied.

Determination of Assessable Value for Job Workers:
The learned DR sought to reverse the C.C.E (Appeals) order, arguing that there was no commercial price involved in the case. Conversely, the consultant for the respondent contended that the job worker had an independent price at the factory gate, which was correctly adopted. Referring to the Ujagar Prints case and Circular No. 215/85/96-C.X., the consultant argued that the assessable value should be based on the commercial transaction at the factory gate. Citing the Sangam Processors case, it was emphasized that where a job worker has an independent price and engages in commercial transactions at the factory gate, that price should be considered.

Applicability of Commercial Transaction in Valuation:
Upon reviewing the submissions, the tribunal observed that the C.C.E (Appeals) had appropriately considered the commercial transaction and assessable value at the factory gate. It was noted that in line with the Ujagar Prints case, when a job worker declares a commercial transaction in the price list, that value should be accepted. The distinction was made for cases without factory gate sales, where the norms established by the Supreme Court should be applied. The tribunal upheld the C.C.E (Appeals) decision, supported by the Board's circular and the precedent set by the Sangam Processors case.

Consideration of Supreme Court Judgments in Valuation Disputes:
The judgment underscored the importance of adhering to the Supreme Court's rulings in valuation disputes involving job workers. It clarified that the intrinsic value, including conversion charges, raw material cost, and job worker's profit, should be considered, as established in previous cases. Failure to apply this principle by the Assistant Commissioner led to the acceptance of the price declared by the job worker based on independent commercial considerations.

Relevance of Circulars and Tribunal Judgments in Assessing Value:
The tribunal emphasized the significance of circulars and tribunal judgments in guiding the assessment of value for job workers. By referencing Circular No. 215/85/96-C.X. and the Sangam Processors case, it affirmed the validity of considering independent prices and commercial transactions at the factory gate. The tribunal found no ambiguity in the C.C.E (Appeals) order, ultimately rejecting the appeal due to its lack of merit.

← Previous Next →