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TMI Blog2011 (9) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... re arising out of Orders-in-Appeal No. AKP/137-138/DMN/VALSAD/2009-2010, dated 23-11-2009. Since all the appeals raise a common issue and is in respect of the very same assessee and their employee, we dispose of the said appeals by a common order. 2. The relevant facts that arise for consideration are the appellants herein cleared finished products (hallow profiles) manufactured on job work basis, back to their principal who had given the raw material for doing such job work, paying duty, on cost of production of the raw material plus job charges. Revenue Authorities were of the view that provisions of Rule 10(a) of the Central Excise (Valuation) Rules, 2000, effective from 1-4-2007 will apply to this case and the appellant should have discharged the duty liability as a job worker on the basis of 110% of cost of production as per Rule 8 read with sub-rule (iii) of Rule 10(a) of the Valuation Rules, as the principal who had received the hallow profiles, had captively consumed the same and there was no sale. Coming to such a conclusion, show cause notice was issued for demand of differential duty payable by the assessee. The adjudicating authority confirmed the differential duty de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts the finished goods into the market as directed by the principal-manufacturer or sends it to the depot of the principal manufacturer for further sales. In the case in hand, it is undisputed that the job worked hallow profiles are dispatched to the principal-manufacturer and consumed in the further manufacturing of final products. Secondly, provisions of Rule 8 of the Central Excise Valuation Rules will not also apply in this case for the simple reason as the said provisions only discuss about the captive consumption of the goods by the manufacturer himself or on his behalf. 7. We find that an identical issue in the case of Advance Surfactants India Ltd. (supra) came up before the coordinate Bench of the Tribunal in Bangalore, wherein I was one of the Member and the Bench took the following view. 7. On these factual matrix we need to appreciate the provisions under Rule 10A, which is reproduced herein under : RULE 10A. Where the excisable goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then,- (i) in a case where the goods are sold by the principal manufacturer for delivery at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very clearly mandate that in a case not covered under clause (i) or (ii), the provisions of foregoing rules, wherever applicable shall mutatis and mutandis apply for determination of value of the excisable goods. This would indicate that the provisions of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 has to be gone through serially. It is not the Revenue s case that provisions of Rule 3, 4, 4, 6 and 7 would also apply in this case. Revenue is of the view that provisions of Rule 8 will apply. In order to understand the Revenue s case, we reproduce the provisions of Rule 8. RULE 8. Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the values shall be [one hundred and ten per cent of the cost of production or manufacture of such goods. 7.2. It can be seen from the above reproduced Rule that this will come into play only when the goods are used for consumption by the assessee or on his behalf, in the production or manufacture of other articles, in such a case the value shall be 110% of the cost of production or manufacture of such goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with Rule 8 of the Valuation Rules which provides for taking of 110% of the cost of production of the goods. (Madan Mohan) Under Secretary (CX.I) 8.1. It can be seen that the clarification issued by the C.B.E. C. seems to be untenable in view of the foregoing reasons. The views expressed in the Circular are inconsistent with the provisions of Rule 8. The provisions of Rule 8 can be brought into play only if there is consumption of the goods by himself or on behalf of an assessee. Since the said clarification is against the mandate of the said Rule 8 of Central Excise Valuation (Determination of Prices of Excisable Goods). Rules, the said clarification is untenable and has to be held as such. 9. We find that our above view has been confirmed by the Bench in the Tara Industries Ltd-case (supra). We may reproduce the said ratio. 2. The appellants manufacture wool Tops, on job work basis out of raw wool received from parties for whom the job work is undertaken. They worked out the assessable value (for Central Excise purposes) of wool tops as the aggregate of the cost of raw material and their job work charges and paid duty on the basis of such assessable value under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker, will not be sufficient ground to contend that the dealings between the two are not at arms length Goods manufactured on job work were earlier assessed under the residuary Rule 7 of the erstwhile Valuation Rules of 1975 read with Rule 6(b) read with the Apex Court decisions referred to above. 3. Under the new valuation provisions, introduced with effect from 1-7-2000, there is no departure from the principles laid down by the Apex Court in the above two decisions, in respect of goods manufactured on job work basis. In other words goods manufactured on job work basis after 1-7-2000 will continue to be valued in the same manner as they were being valued before 1-7-2000. In other words, after 1-7-2000, in respect of goods manufactured on job work basis, valuation would be governed by Rule 11 of the new Valuation Rules of 2000 read with Rule 6 read with the above two decisions of the Apex Court. 3. It is clear from the above two paras of the Circular that goods produced on job work basis are required to be valued according to the rule laid down by the Apex Court s Judgment in the case of Ujagar Prints Ltd. [1989 (39) E.L.T. 493 (S.C.) = (2002-TIOL-03-SC-CX.)] even af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such goods manufactured on job work will be governed by the ratio of the judgment of the supreme court in Ujagar Prints. 11. That still leaves us with a question of how the determination of value has to be done as provided under Rule 10A(iii). By elimination of Rule 2 to 10 as they may not apply in a situation- like in this case provisions of Rule 11 will apply and Revenue has to take the recourse to provisions of Rule 11 which talks about using reasonable means consistent with the principles and general provisions of these rules read with sub-section (1) of Section 4 of Central Excise Act, 1944. Keeping this in mind, we find that the ratio laid down by the Hon ble Supreme Court in the case of Ujagar Prints and followed by various other decisions of this Tribunal and accepted by Revenue in their various Circulars will squarely apply i.e. to ascertain the assessable value on the cost of materials plus processing charges. In our view, the appellants have been correctly valuating their products by adopting this method. 12. We find that the judgment relied upon by the learned SDR of this Bench in the case of Ultrapack is on a different set of facts i.e. in that case, the Ultra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value shall be [one hundred and ten per cent] of the cost of production or manufacture of such goods As is clear from the above, Rule 8 is applicable to the assessee who manufactures the goods and uses the same captively either by himself or on his behalf. The said Rule would have been applicable if M/s. Sai Flipped Coil Pvt. Limited would have manufactured the goods themselves and then used the same captively. In the present case the appellant is an independent manufacturer who had manufactured the goods out of the raw material supplied by M/s. Sai Flipped Coil Pvt. Limited, instead of using its own raw material. He is not the manufacturer and is further consuming the goods captively for his own manufacturing activities. The fact, whether the person who has sent the raw material and to whom the final products stand cleared by the job worker has used the same captively or has sold the same in market, would not change the situation, so as to not to apply the principles laid down by the Hon ble Supreme Court in the case of Ujagar Prints for the purpose of arriving at the assessable value. 9. The above reproduced ratios squarely cover the issue in favour of appellants. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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