2024 (12) TMI 732 - AT - Central Excise

Valuation of Excise Duty - inclusion of cost of certain inputs supplied by the principal manufacturer to the job worker (appellant) in the assessable value of the goods manufactured by the job worker and supplied to their principal manufacturer and the principal manufacturer cleared the final products on payment of duty - HELD THAT - It is found that the facts of this case is exactly identical to the facts in the case of Hon ble Supreme Court judgment in International Auto Limited 2005 (3) TMI 132 - SUPREME COURT inasmuch as the appellant is job worker manufacturing the excisable goods using their own components and parts and some of the parts are supplied by the principal manufacturer on which the Cenvat credit was availed by the principal manufacturer. After the manufacture of job work goods the appellant have cleared the same to the principal manufacturer and the principal manufacturer in turn used the job work goods or cleared as such on payment of excise duty. It is this fact, in context of which the Hon ble Supreme Court held that since the principal manufacturer has cleared the ultimate goods on payment of duty, the value of parts supplied by the principal manufacturer of the job worker is not includible in the assessable value of the job work goods in the hands of the job worker. In the present case also the cost of the parts supplied by the principal manufacturer is not includible in the assessable value of the job workers. Therefore, the demand raised on the appellant who is a job worker, is not sustainable - the impugned order is set-aside - Appeal is allowed.

Summary

Issues:
Whether the cost of inputs supplied by the principal manufacturer to the job worker is includible in the assessable value of goods manufactured by the job worker and supplied to the principal manufacturer.

Analysis:
The case involved the question of whether the cost of certain inputs supplied by the principal manufacturer to the job worker should be included in the assessable value of the goods manufactured by the job worker. The appellant, a job worker, had manufactured excisable goods using both their own components and parts supplied by the principal manufacturer. The principal manufacturer had cleared the final products on payment of duty. The appellant argued that based on previous Supreme Court judgments, the value of parts supplied by the principal manufacturer should not be included in the assessable value of the job work goods. The Tribunal examined the facts and referred to the Supreme Court judgment in International Auto Limited, where it was held that if the principal manufacturer clears the final goods on payment of duty, the value of parts supplied by them to the job worker should not be included in the assessable value of the job work goods. The Tribunal found the facts in the present case to be identical to the International Auto Limited case and ruled in favor of the appellant.

The appellant relied on the judgment in International Auto Limited and another case of Manon & Menon Limited, where the Supreme Court had held that the manufacturer of final products could adjust the credit on inputs supplied to intermediate purchasers. The Tribunal, following these judgments, dismissed the appeal against the demand raised on the job worker. The Tribunal concluded that the cost of parts supplied by the principal manufacturer should not be included in the assessable value of the job worker's goods. As a result, the impugned order was set aside, and the appeal was allowed in favor of the appellant.