2018 (2) TMI 796 - AT - Central Excise

Valuation - fully manufactured motor vehicle cleared by the job worker - Revenue held a view that the job worker having cleared fully manufactured motor vehicle on behalf of the appellant to depot of the appellant for further sale, the correct valuation should be the transaction value of such motor vehicle and not the cost plus processing charge as adopted by the job worker. Held that - Admittedly, the manufacture of full vehicle is not carried up by the appellant in their premises - The duty liability and correct valuation on such goods rest with the actual manufacturer. There is no job work arrangement in terms of Central Excise provisions to link up these two (appellant and job worker) for Central Excise provisions including the differential duty. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of fully manufactured motor vehicle cleared by job worker, differential duty liability, applicability of Central Excise provisions.

In this case, the appellants, engaged in manufacturing motor vehicle chassis, cleared chassis with engines and paid applicable Central Excise duty. The issue arose when a job worker further manufactured the full motor vehicle by building the body and cleared the goods on payment of duty. The Revenue contended that the correct valuation of the fully manufactured motor vehicle should be based on the transaction value and not the cost plus processing charge as adopted by the job worker. A differential duty of ?22,19,802 was confirmed against the appellant for the period March 2008 to October 2010.

The appellant argued that they did not follow the job worker procedure under the relevant notification and thus should not be liable for any duty related to the fully manufactured vehicle done by the job worker. They maintained that as they did not manufacture the motor vehicle during the relevant period, no duty liability or differential duty could be confirmed on them for the vehicle manufactured by a third party on a job work basis.

The Revenue, however, supported by the lower authorities, contended that since the job worker was not the owner of the goods, they could not arrive at the proper valuation, and thus, the appellant, as the owner, should discharge the duty based on the full transaction value.

After hearing both parties, the Tribunal noted that the appellants had only manufactured chassis with engines and cleared them after paying duty. The full motor vehicle was not manufactured by the appellants themselves but by the job worker. As there was no job work arrangement linking the appellants and the job worker for Central Excise provisions, including differential duty, the Tribunal found no merit in the Revenue's claim. The Tribunal concluded that the duty liability and correct valuation of the fully manufactured vehicle rested with the actual manufacturer, the job worker, and not the appellants. Therefore, the impugned order was set aside, and the appeal was allowed.