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TMI Blog2005 (8) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... v. UOI reported in 1988 (38) E.L.T. 535 (S.C.) clarifactory judgment reported in 1989 (39) E.L.T. 493 (S.C.) and Pawan Biscuits Co. (Pvt.) Ltd. v. Commissioner of Central Excise, reported in 2000 (120) E.L.T. 24 (S.C.) as well as circular bearing no. 619/10/2002-CX., dated 19-2-2002 reported in 2002 (140) E.L.T. 28-30. 1.3 In the appeals (E/2053/2004 to E/2055/2004 E/2052/2004 to 2058/2004). Revenue has sought to value the goods, in terms of Rule 7 of the Central Excise Valuation Rules, 2000, i.e. the price at which such goods are sold by Rallis, on account of FMC, from their depots as consignment stockists of FMC under the consignment Agency Agreement (in short CAA) dated 8-12-2000. 1.4 In the appeals E/724/2005 E/725/2005 for the same goods, for the same period, a divergent stand has been taken by the Revenue, wherein Revenue after having taken cognizance of the fact that Rallis was manufacturing the impugned goods, under job work arrangement of FMC has accepted the valuation on the basis of cost of material + job charges as laid down by the Apex Court in the Ujagar Prints Pawan Biscuits (supra) however, the only dispute-that has been raised is that the commission rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring on own account the goods sold from various depots of Rallis on own account (before the impugned show cause notice period) Rallis-Akola factory manufacturing on job work basis on account of FMC the said FMC goods sold from various depots of Rallis as consignment agents of FMC (during the impugned show case notice period) Import of technicals (principal raw material) by Rallis from FMC Corporation USA as well as procurement of other raw materials packing materials by Rallis on own account for its Akola factory. Import of technicals (principal raw materials) by FMC from FMC Corporation, USA as well as procurement of other raw materials and packing materials by FMC sending the same free of cost to the Akola factory of Rallis for conversion on job work basis. Manufacture of formulations at Akola factory by Rallis on own account Manufacture of formulations at Akola factory by Rallis on job work basis on account of FMC Manufactured goods transferred from Akola factory to depots located all over the country for sale on own account. Goods after manufacture on job work basis at the Akola factory of Rallis delivered to FMC s C F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country wide dealer network by Rallis in an entirely different capacity i.e. as a consignment agent in consideration for commission on which even service tax was being discharged by Rallis. (iii) the CCE has further failed to appreciate that the MPA and the CAA entered into between Rallis FMC were based on sound rational commercial considerations and the reduction in assessable value for the purpose of central excise was only incidental in terms of the law of the land. The CCE failed to realize that neither the valuation provisions contained in Central Excise nor any other law requires a manufacturer (assessee) to always keep the value of goods manufactured by him at par at all times. He further erred when he failed to realize that value of the goods for levy of excise duty would be governed by the settled positions of law provided in the relevant provisions and not on the basis of history of the value of the impugned goods. Thus the CCE was wholly unjustified in coming to erroneous conclusions based on the contention that because during the period prior to the impugned period, Rallis had declared higher prices of goods, the subsequent reduction in the assessable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to only when an assessee who is the owner of the goods manufactured by him on his own account instead of selling the goods from his factory gate, sells the goods from his depots or premises of a consignment agent. The said principle has been held by the Larger Bench in the case of Prafful Industries Ltd. v. Commissioner of Central Excise, Mumbai reported in 2000 (118) E.L.T. 97 (T-LB). Though Rallis manufactured the goods as a job worker, it does not own the goods and hence Rule 7 cannot be made applicable to Rallis. The title property in the goods always vests with FMC. Application of Rule 7 in the said cases of job work would tantamount to taxing trader s (FMC) profit and trader s (FMC s) expenses towards publicity, advertisement, freight expenses etc., which cannot be done in terms of settled legal principles. Hence the valuation under Rule 7 of the Valuation Rules is not warranted in case of job work. (f) The CCE has observed in the order that - (i) in the instant the job work arrangement does not end with return of processed goods to the principal, which is an ideal case, and (ii) in the impugned period, the job work arrangement has resulted in substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arms length. It is also not in dispute that there is no flowback from FMC to Rallis or vice versa and the only consideration received by Rallis from FMC is as per the MPA i.e. processing charges CAA i.e. commission on sale. It is not also in dispute that the joint venture had ended much before the actual commencement of operations under the MPA CAA and that reduction in duty under MPA is as per the law of the land. Hence the case of H. Guru (supra) is clearly distinguishable on facts not applicable in the instant case. (ii) UOI v. Playworld Electronics Pvt. Ltd. - 1989 (41) E.L.T. 368 (S.C.) In the captioned case, the facts were that the respondent company used to sell their entire production to M/s. Bush India Ltd., in the brand name of Bush. The dispute was raised by the jurisdictional excise authorities that the goods should be valued at the price at which M/s. Bush India sell the goods on the ground that the respondent M/s. Bush India were related persons that M/s. Bush India was a favoured buyer. The Hon ble High Court, on the basis of facts on records, held that the valuation had been correctly done by the respondents i.e. the price at which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the statute by Rallis. Reliance placed by the appellant on the decision of the Apex Court in the case of Pratibha Processors v. UOI reported in 1996 (88) E.L.T. 12 (S.C.) is fully justified. (j) Penalty under Section 11AC and interest under Section 11AB of the Central Excise Act, 1944 not imposable on Rallis in the view of findings herein. (i) Penalty under Rule 25 cannot be imposed on Rallis inasmuch as Rallis has not indulged in any of the contraventions mentioned in Rule 25 and has paid duty on the basis of the principle laid down by the Apex Court in the case of Ujagar Prints Pawan Biscuits (supra) and further confirmed by the Board vide its Circular dated 19-2-2002. (j) Simultaneous penalty under Section 11AC and under Rule 25 is not imposable on Rallis following the decisions - (i) National Fertilizers Ltd. v. CCE, Indore reported in 2000 (122) E.L.T. 41 (Tribunal- New Delhi) Avdel (I) Pvt. Ltd. v. CCE, Mumbai reported in 2004 (171) E.L.T. 201 (Tribunal) = 2004 (117) ECR 699 (Tri.-Mumbai) (ii) Orders of Board vide M.F. (D.R.) No. B40/20/96-TRU, dated 28-9-96 reported in 1996 (87) E.L.T. T27-T28, wherein it is cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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