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TMI Blog2010 (9) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... , the provisions of Section 4A of Central Excise Act, 1944 are not applicable. Hence, Central Excise duty was paid by the appellants on the value arrived basing on the landing cost of the raw materials and the production overheads which is mutually agreed by both SIPL and the appellants. Appellants were raising invoice on SIPL treating it asSaleat transaction value under Section 4(1)(a) of Central Excise Act, 1944 for the purpose of payment of Central Excise duty. Invoice amounts were adjusted against the advances paid by SIPL. As the transaction between the appellants and SIPL appeared to be a job work, the important and salient features of the agreement were examined for demarcating the roles played by the appellants and SIPL in the said activity of manufacture and supply of paints. Show cause notices were issued to the appellant to treat the appellant as job worker as per the provisions of Rule 10A of the Central Excise Valuation (Determination of price of excisable goods) Rules, 2000 (hereinafter referred to as Rules). The appellant resisted the show cause notices on various grounds and mostly on the ground that they are not job workers, but the transaction between them and SIP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls from the specified vendors only for the reason that the manufacture of paint for SIPL were for specific application and quality needs to be maintained; there was no compulsion on the part of the SIPL or for the price for the raw materials, on the contrary the price at which the raw materials procured from the supplier were negotiated prices. It is the submission that the purchases of the raw materials were directly done by the appellant and cannot be considered as being directed by SIPL. As regards the finding that the amounts advanced for procurement of raw materials to the vendors was given by the said SIPL, it is his submission that it is a normal commercial consideration and can be considered as an advance received for manufacturing and clearing of special application paints. It is his submission that the concept of job worker in this case would not arise as provided under provisions of Rule 10A of the said Rues. He would draw our attention to the said Rule 10A as was brought into force fromthe 1st April, 2007. He would submit that the explanation given to the said rule defines job worker as to mean who would directly undertake that the inputs or goods needs to be supplied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant and SIPL. It is also undisputed that the clauses of the agreement indicated that both the parties have understood the arrangement as principal to principal basis. It is seen that clause No. 1 and 2 of the said agreement indicate the actual position when both the parties entered into agreement, which are as under :- "1. Sigmakalon India Pvt. Ltd. is a dealer of Marine and Protective Coatings (hereinafter called the Products) AT and looking for external extension of its production capacity for a limited range of such products, and does not currently have manufacturing facilities in India, 2. Coromandel Paints Limited has sufficient capacity available at their production facilities atVisakhapatnamand is willing to manufacture and supply paints to Sigmakalon at a price that is mutually beneficial and reasonable." 8. It can be noticed from the above reproduced clause that the appellant herein was willing to manufacture and supply paints to SIPL at a price i.e. mutually beneficial and reasonable. This would indicate that both the parties had an intention to enter into an agreement for purchase and sale of the paints, which are for specific application and are m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial; as to how the price shown in the invoices is not the sole consideration and there are various other considerations as per the terms of the agreement was explained in the impugned order. I do not find any infirmity in the impugned order to cause any disturbance of the decision." 10. We find that the entire thrust of the findings of ld. Commissioner (Appeals) is the definition of job worker which has been relied upon. We find that the definition or the explanation to Rule 10A of the Valuation Rules which indicates who is a job worker specifically indicates that the job worker would be a person who manufactures or produces goods on behalf of principal manufacturer from any inputs or goods supplied by the principal manufacturer or other persons authorized by him. In the case before us, it is on record and as per the agreement entered between both the parties, that the appellant will purchase and procure the raw materials, packing materials and manufacture the paints as per the specification of the SIPL. The question of receiving advance money for payment towards the purchases of raw materials for is normal commercial terms. It is to be seen that there nothing on record to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement in no way suggests anyone to take a view that the appellant was a job worker of SIPL. Further, we find that clause No. 15D of the said agreement which we are reproducing herein under would indicate the relationship between the appellant and SIPL. "15D. This agreement is devised as "AGREMENT FOR MANUFACTURE AND SUPPLY OF PAINTS" for the limited purpose of defining the remuneration/margin of profit eligible to be retained by M/s. Coromandel Paints Ltd., Visakhapatnam, in pursuance of this agreement. The production and supply of paints by Coromandel to Sigmakalon will be on principal to principal basis and all applicable taxes on such sale shall be paid by Coromandel at the time of its supply. For all statutory purposes, including payments of taxes, compliance of labour and other loss, including the responsibility of manufacturing quality paints as per the prescribed specification, M/s. Coromandel Paints Ltd. shall be manufacturer and is expected to discharge the entire liability cast on them as manufacturer, under this agreement. Excise duty, sales tax and other levies will have to be paid by Coromandel treating the same as sales to Sigmakalon, on the full value d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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