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TMI Blog2011 (6) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... e customers or manufactured the said product on job work basis out of the raw materials supplied by their customers. The jurisdictional Central Excise officers visited the factory premises of the appellants on 03/12/98 and verified the records. The officers found that during the period from August to November 1998, the appellants had manufactured PNA for M/s. Ambuja Intermediates Pvt Ltd., (AIPL in short) for which AIPL had supplied the main raw materials viz., Para Nitro Chloro Benzene (PNCB in short). The appellant had used other raw materials and packing materials such as Ammonia, LDO, HDPE Bags, etc. from their own stock and they had discharged duty liability on a value of Rs.34/- per Kg. on PNA cleared to AIPL on job-work basis. In respect of the same product manufactured and sold on their own account, they had discharged duty liability on a value of Rs.69/- per Kg. Therefore, the officers were of the opinion that in the case of PNA manufactured by the appellants on job work basis for AIPL, they did not include the value of their own raw materials and packing materials used by them in the manufacture of said products and cleared to AIPL. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Commissioner, while confirming the duty demand, came to the conclusion that the appellant was manufacturing PNA for AIPL on job work basis wherein the major raw material, PNCB, was supplied by the AIPL and other raw materials were being used by the appellant from their own account; however, while supplying the PNA to AIPL, the cost of the main raw material, PNCB, supplied by them was not being included and, hence, the goods were supplied by much lower rate than the rate charged to independent buyers, who are not supplying the raw materials. Therefore, he ordered that the assessable value should be arrived at by resorting to the Section 4 (1) (b) of the Central Excise Act,1944 read with Rule 7 of the Valuation Rules, 1975. 2.4 The Addl. Commissioner also concluded that the appellants had not maintained separate accounts in respect of the common inputs, which were used in the manufacture of job-worked material as well as on their account and, therefore, they were required to pay an amount equal to 8% of the price of the exempted PNA supplied on job work basis under Rule 57CC of the Central Excise Rules. 2.5 The appellants preferred an appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted for computation of duty demand does not even pertain to the period of demand and pertains to July 98, whereas the period of demand is from August 98 to December 98, during which period, the highest price charged was Rs.51.56 and, therefore, they are disputing the demand of duty itself. 3.3 With regard to the demand of Rs.2,69,376/- on the ground that common inputs have been used in the manufacture of dutiable as well as exempted goods, without maintaining any separate records, the ld. counsel contends that the appellant had received common inputs, namely, PNCB, from three parties under Rule 57F (4) and they had maintained separate records for receipt and usage of the same and the goods after job work were returned to various parties on payment of duty. Similarly, in respect of other materials, namely, ammonia, LDO, HDPE bags, etc. they had not taken any credit of modvat and they had maintained separate accounts. Therefore, the allegation that the appellant had used common inputs in both dutiable as well as exempted products without maintaining separate register is not based on any facts and the appellant's registers maintained in this regard disproves th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, even if they have not included the value of PNCB supplied by the principal manufacturer as found by the original adjudicating authority, duty cannot be demanded on that value in view of the judgement of the Hon'ble apex Court in the International Auto Ltd. case. The Ld. Advocate also placed reliance on the judgement of the Tribunal in the case of M.Tex & D.K. Processors reported in 2001 (136) ELT 73 (T) wherein it was held that the job worker is not liable to pay duty when he receives material from the principal manufacturer and it is the final product manufacturer, who is liable to pay duty and not the job worker. In the instant case, they have acted as job workers as far as AIPL is concerned and, therefore, the duty liability would be on AIPL and not on them. 3.6. In the light of the above, the ld. Counsel contends that both the original as well as the lower appellate authority have made errors in their findings and, accordingly, their orders are not sustainable in law. 4. The Ld. DR appearing for the revenue reiterated that the findings given in the orders of the lower authority. He submitted that the reduction of penalty by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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