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TMI Blog1998 (6) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 173Q(1) and 209A of C.E. Rules, 1944. The appellants were issued with Show Cause Notice inter alia alleging that - (a) M/s. RFI i.e. Raghavendra Food Industries are having a Central Excise Licence L.4 No. 1/84 for the manufacture of Biscuits falling under sub-heading 1905.11 of C.E.T. Act, 1985. (b) They are availing Modvat credit under Rule 57A of C.E. Rules, 1944. (c) The unit was manufacturing biscuits on their own right from the date of commencement of production and subsequently doing job work of conversion of raw material into biscuits for M/s. Auro Food Ltd. (M/s. AFL, for short), Pondicherry viz., True branded biscuits. (d) M/s. RFI had made an agreement in the form of a letter on 17-9-1990 and 1-11-1990 with M/s. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. RFI without any authority or authorisation from M/s. Auro Food Ltd., in writing. (l) M/s. RFI has filed Price lists to the Department in Part VII and the elements of cost of raw material + conversion charges were taken into account for the purpose of arriving at the assessable value. 2. It was also alleged that in terms of the agreement it is clearly mentioned that M/s. AFL not only exercise the quality control but also exercise full control over the manufacture of goods by M/s. Raghavendra Foods. It was alleged that M/s. RFI do not have any ownership right in the manufactured goods which is also evident from the fact that M/s. RFI can destroy the rejected goods after paying the value of raw material/packing material to M/s. Aur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related persons. Therefore, price list filed by M/s. RFI is required to be accepted and not the value of M/s. AFL as they were trading with biscuits by adding their profit. Several contentions had also been taken by them, including large number of judgments being cited. However, learned Collector rejected all these pleas and held that there was suppression of facts and held that M/s. RFI were manufacturing on account of M/s. AFL and therefore the value of M/s. AFL is required to be accepted and not the price list declared by M/s. RFI. In view of various other findings, he confirmed the demand and also imposed penalty on the appellants. 4. Arguing for the appellants, learned Advocate submits that arrangement between both the firms was on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y this Bench which also had followed the same decision of Rajashree Foods Pvt. Ltd. case. He also relied on the Delhi Bench order as rendered in the case of Kandivalimetal Works v. CCE reported in 1997 (90) E.L.T. 187 (T) wherein it has been held that if goods manufactured on job work basis not used or consumed by assessee but returned to the supplier of raw material in such cases assessable value is not to be based upon the value of `comparable goods under Rule 6(b) (i) of C.E. (Valuation) Rules but to be determined on the basis of cost of raw materials and job work charges in terms of Section 4 of C.E. Act, 1944. Learned Advocate also submits that this judgment has been confirmed by Hon ble Supreme Court as can be noticed from the report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h office. The other terms of the show cause notice have already been incorporated above. We notice from the law laid down in all the citations that the supplier of raw material was not the manufacturer. Now, in this case the job worker is the manufacturer on his own account, and the relationship is on principal to principal basis and that they are not related persons, in such circumstances, the value of `deemed goods manufactured and sold at `deemed factory gate is required to be accepted and not the value at which the goods manufactured or sold by the trader or supplier of the raw materials in terms of ratio laid down by the tribunal. We notice that the facts in the present case are totally fitting with the ratio of the judgments cited s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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