2020 (3) TMI 308 - AT - Central Excise

Valuation - goods supplied on principal to principal basis - job-work or not - Department observed that M/s. Inova was only acting as a job worker for M/s. Roca and that the goods were not ordinarily sold at the factory gate of M/s. Inova and hence, the price adopted for payment of duty by M/s. Inova was not the sole consideration for sale as per Section 4 (1) (a) of the Central Excise Act, 1944 - HELD THAT - It is an admitted fact, as seen from the Show Cause Notice as well as the impugned order, that M/s. Inova has procured the urinal casings from M/s. Roca by transaction of purchase and sale. Merely because the goods manufactured by M/s. Inova bear the brand name of M/s. Roca, the Department has viewed the transaction as a manufacture done by a job worker on behalf of the principal manufacturer. The very same issue decided in the case of SUJHAN INSTRUMENTS VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II, HONEYWELL ELECTRICAL DEVICES AND SYSTEMS INDIA LTD. VERSUS PRINCIPAL COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I AND COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI VERSUS SUJHAN INSTRUMENTS 2018 (7) TMI 420 - CESTAT CHENNAI where it was held that when the transaction is on principal to principal basis, the allegation that the assessee is manufacturing as a job worker for the principal manufacturer cannot sustain. The demand do not sustain - penalty also do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Determining whether the appellant acted as a job worker for the principal manufacturer, leading to a demand of differential duty, interest, and penalties.

Analysis:
The case involved M/s. Inova, engaged in manufacturing Electronic Flushing Systems, and M/s. Roca, supplying urinal casings to M/s. Inova. The Department alleged that M/s. Inova acted as a job worker for M/s. Roca, not on a principal-to-principal basis. The Department contended that the goods were not sold at the factory gate of M/s. Inova, affecting the duty payment. The Show Cause Notice raised a demand for differential duty, interest, and penalties. The Original Authority confirmed the demand and penalties, leading to the appeal before the Tribunal.

The appellant argued that M/s. Inova did not qualify as a job worker as per Rule 10A of the Central Excise Valuation Rules. They highlighted that M/s. Inova purchased urinal casings from M/s. Roca, making them the property of M/s. Inova, not belonging to M/s. Roca. The appellant emphasized their independent entity status and lack of manufacturing on behalf of M/s. Roca. The appellant cited relevant case law to support their position.

The Department supported the findings in the impugned order, maintaining that M/s. Inova acted as a job worker for M/s. Roca.

The Tribunal analyzed the case, referencing a similar case involving Sujhan Instruments and Honeywell. The Tribunal emphasized the criteria for a job worker, including the supply of inputs by the principal manufacturer. The Tribunal concluded that M/s. Inova did not qualify as a job worker based on the facts presented. Following the precedent set in the case of Coromandel Paints Ltd., the Tribunal set aside the impugned order, allowing the appeals with consequential reliefs as per law.

Ultimately, the Tribunal ruled in favor of the appellant, determining that M/s. Inova did not act as a job worker for M/s. Roca. The demand for duty, interest, and penalties was set aside, providing relief to the appellants.