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2025 (3) TMI 1242 - AT - Central ExciseJustification in demanding duty by allowing the valuation of the goods manufactured by the appellant job worker in view of the amendment to Rule 10A of the Central Excise Valuation Rules 2000 - HELD THAT - The facts not in dispute are that the Appellants had been engaged by M/s.Marico Ltd. (hereinafter referred to as the Principal Manufacturer) for the purpose of job work and the Appellants had manufactured the impugned goods out of the raw materials supplied by the principal manufacturer. The appellants had cleared the goods to the principal manufacturer who in turn had captively consumed the goods for further manufacture. The appellants had adopted the value comprising the cost of materials used and conversion charges following the principles laid down by the Apex Court in the case of Ujagar Prints Ltd 1989 (1) TMI 124 - SUPREME COURT . Admittedly the FAA has applied Rule 10(A)(iii) in the case on hand to hold that the valuation as prescribed thereunder would apply for determination of the value of the excisable goods. He thus upholds the demand of duty but however penalties imposed by the original authority in respect of both the appeals are set aside. The appellant here-in has challenged the duty demand confirmed against them while the revenue has accepted the deletion of penalties on these appellants. Conclusion - The valuation of goods manufactured on a job work basis should align with the Supreme Court s ruling in Ujagar Prints which considers the cost of materials and conversion charges. The impugned orders in appeal cannot sustain insofar as the duty demand which is challenged in these appeals is concerned - Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered by the Tribunal was whether the Revenue was justified in demanding duty from the appellant, a job worker, by allowing the valuation of goods manufactured in view of the amendment to Rule 10A of the Central Excise Valuation Rules, 2000. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework primarily involved the interpretation and application of Rule 10A of the Central Excise Valuation Rules, 2000, which pertains to the valuation of goods manufactured on a job work basis. The Tribunal also considered the principles laid down by the Supreme Court in Ujagar Prints vs. UOI, which provides a formula for valuation in such cases. Court's Interpretation and Reasoning The Tribunal noted that the appellants had adopted a valuation method based on the cost certificate issued by the principal manufacturer, M/s. Marico Ltd. The Revenue's contention was that this method did not comply with Rule 10A(iii) read with Rule 8, leading to undervaluation and short payment of duty. However, the Tribunal found that the valuation method used by the appellants was consistent with the Supreme Court's ruling in Ujagar Prints, which was a relevant precedent for determining the value of goods manufactured on a job work basis. Key Evidence and Findings The Tribunal considered the fact that the appellants had crossed the SSI exemption limit and started paying the full rate of duty. It was also noted that the appellants had followed the valuation principles laid down by the Supreme Court, which included the cost of materials and conversion charges. The Tribunal found no evidence of intentional undervaluation by the appellants. Application of Law to Facts The Tribunal applied the principles from Ujagar Prints to the facts of the case, concluding that the valuation method used by the appellants was appropriate. The Tribunal also referred to several decisions from coordinate benches, which supported the appellants' method of valuation and led to the setting aside of similar duty demands in other cases. Treatment of Competing Arguments The Tribunal considered the arguments presented by the Revenue and the appellants. The Revenue argued for the application of Rule 10A(iii), while the appellants contended that their valuation method was consistent with established legal principles. The Tribunal favored the appellants' arguments, supported by precedents from both the Supreme Court and other coordinate benches. Conclusions The Tribunal concluded that the impugned orders demanding duty based on the valuation method prescribed by Rule 10A(iii) could not be sustained. The Tribunal set aside the duty demands and allowed the appeals, granting consequential benefits to the appellants as per law. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning The Tribunal stated, "In view of the clear ratio decidendi, we hold that the impugned orders in appeal cannot sustain insofar as the duty demand which is challenged in these appeals is concerned." Core Principles Established The Tribunal reinforced the principle that valuation of goods manufactured on a job work basis should align with the Supreme Court's ruling in Ujagar Prints, which considers the cost of materials and conversion charges. The Tribunal also emphasized the importance of consistency with established legal precedents. Final Determinations on Each Issue The Tribunal determined that the appellants' method of valuation was appropriate and consistent with legal precedents. Consequently, the duty demands based on an alternative valuation method were set aside, and the appeals were allowed with consequential benefits to the appellants.
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