2023 (10) TMI 221 - AT - Central Excise

Valuation of goods - manufacture of N-Methyl Pyrrolidone on Job-work basis - collection of certain amount towards Toll Charges or Conversion Charges, Trial Run Charges and Utility Charges from their principal M/s AACL - to be included in the manufacturing cost or not - HELD THAT - There is no dispute that irrespective of any value of Job-work goods considering it as not a sale, the appellant have paid the excise duty on the same transaction value, at which the principal manufacturer has sold the goods to unrelated person - From the invoices, it can be seen that the Job-worker s invoice reference was given in the sale invoice of the principal manufacturer and it is observed that in both the invoices the assessable value is the same transaction value, at which the goods were sold by the principal manufacturer. From the Rule 10A(i), it is clear that in respect of Job-work goods, when the same is sold by the principal manufacturer, the transaction value of the said goods sold by the principal manufacturer shall be adopted by the Job-worker for payment of Excise Duty. In view of the clear provision for valuation of Job-work goods, as provided in the above Rule 10A(i), there is no reason to add any other element in the transaction value - the demand in the present case is completely illegal and incorrect and without support of any law. The impugned order set aside - appeal allowed.

Summary

Issues:
The case involves the valuation of goods for the purpose of Central Excise Duty, specifically focusing on additional charges collected by the appellant from their principal.

Valuation of Goods:
The appellant, engaged in Job-work basis manufacturing, availed Cenvat Credit on inputs and discharged duty liability on finished goods for their principal. The department contended that additional charges collected by the appellant should be included in the transaction value for excise duty calculation. However, the appellant argued that they paid duty based on the transaction value of the principal, as per Rule 10A of Central Excise Valuation Rules, and there was no short payment of duty. The Tribunal observed that the appellant paid duty on the same transaction value at which the principal sold the goods, as evidenced by the invoices, thus complying with Rule 10A.

Rule 10A of Central Excise Valuation Rules, 2000:
The Tribunal referred to Rule 10A, which governs the valuation of goods produced by a job-worker on behalf of a principal manufacturer. As per Rule 10A(i), when Job-work goods are sold by the principal manufacturer, the transaction value of those goods shall be adopted by the Job-worker for Excise Duty payment. Since the invoices showed the assessable value as the same transaction value, the Tribunal concluded that there was no need to include any other element in the transaction value. Therefore, the demand for Central Excise Duty was deemed illegal and incorrect, lacking support of any law.

Decision:
Based on the above analysis, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant. The judgment was pronounced in open court on 11.08.2023.