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TMI Blog2013 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 and cleared the same to M/s. Symphony Limited (hereinafter referred to as M/s. Symphony) after discharging Central Excise duty on the basis of transaction value, shown in the Central Excise invoices raised by them to M/s. Symphony. On an intelligence that there was under valuation of the goods cleared by M/s. Abhishri, investigation was taken up, premises of M/s. Abhishri and M/s. Symphony was visited by the revenue authorities and various statements were recorded. After investigation of the case in hand, the revenue officers arrived at a conclusion that the appellant M/s. Abhishri had cleared Air Coolers to M/s. Symphony by resorting to under valuation, inasmuch as the valuation of the goods cleared was not in terms of rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (herein after referred to as Valuation Rules), read with provisions of Section 4(1)(b) of Central Excise Act, 1944. Accordingly, a show cause notice was issued and the same was adjudicated by the Commissioner, Central Excise, Vapi vide order in original No. 02/DEM/VAPI/2012 dated 29.03.2012. The adjudicating authority vide the impugned order has confirmed the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple to a job worker. It is his submission that most of the items are being manufactured by providing designs and moulds but then this does not mean that manufacturer is a job worker. For this proposition he relied upon the decision of the coordinate Bench in the case of Coromondal Paints Limited - 2010 (260) ELT 440 (Tri. Bang.). It is his submission that since the moulds are supplied free of cost by M/s. Symphony to M/s. Abhishri, the said transaction would indicate that the appellant is a job worker as provided under Rule 10A of the said Valuation Rules, is a wrong finding, as the transaction between M/s. Abhishri and M/s. Symphony is on principle to principle basis and based on the agreement made between both. It is his submission that once the valuation of the goods is governed by transaction value as agreed by the seller and buyer, it would be covered under the provisions of Section 4(1)(a) of the Central Excise Act, 1944. It is his submission that even if the supply of moulds is free of cost by M/s. Symphony is to be considered, this would not alter the transaction, as at the most, the transaction value can be discarded by the lower authorities and provisions of Valuation R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is no evidence even after such massive investigation to show that the cost of raw material was influenced by M/s. Symphony and that there is no evidence at the supplier's end to indicate that there was involvement of M/s. Symphony in deciding such supplies. It is his submission that the appellant had negotiated the price, decided the quantity and quality of inputs with the vendors and therefore, there is no influence on the part of M/s. Symphony as regards the price to be charged for supplies of input materials. It is his submission that non mentioning of sales price in the agreement does not in anyway alter the relation of M/s. Abhishri and M/s. Symphony, which is a sale by principle to principle. It is his submission that price can be ascertained between two contracting parties as practically as possible in order to have the healthy relations. He would submit that M/s. Abhishri is exempted from sales tax and non payment of sales tax by Abhishri in their invoices, would not itself mean that the appellant M/s. Abhishri is a job worker of M/s. Symphony. It is his submission that reliance placed on the judgment in the case of Lamina International 2009 (237) ELT 232 , by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equest made by both sides for filing the written submission and permitted then to do so. Both sides have filed written submissions which are taken on record. 4. Learned Additional Commissioner (A.R.) in his written submission filed would submit that the conclusion of the Commissioner that the price is not the sole consideration, is clearly evidenced on the basis of admitted fact that the moulds for Air Coolers were supplied by M/s. Symphony and for which no charges have been paid by M/s. Abhishri. It is his submission that that the design of the Air Cooler was prepared by M/s. Symphony and is registered under the brand name Symphony; it is also admitted that as per the purchase agreement, M/s. Abhishri is not authorised to sell specific brand of Air Cooler in the open market without the consent of M/s. Symphony. It is his submission that the statement of Shri Rajendran of M/s. Abhishri indicate that the rate for the purchase and sale of Symphony brand Air Coolers, manufactured by M/s. Abhishri are calculated as per the purchase rate of raw materials and components with moulding cost and conversion cost with assembly cost and after calculating the said value, in this pattern, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is his submission that non declaration of price which has been unearthed by investigations, cannot be termed as mere omissions but a deliberate effort to escape from payment of duty. It is his submission that in view of these arguments, the applicability of extended period in the instant case is very much well within the provisions of law. 5. Learned counsel's written submission is also considered by us. In the said written submission, learned counsel submits that the issue involved in this case is directly covered by the decision of the Tribunal in the case of CCE, Hyderabad vs. Innocorp Limited. He would submit that the facts in the appellant's case and in the case of Innocorp Limited are identical. It is his submission that not only the facts are identical, but in Innocorp Limited case, they indicate more stringent control of the principle manufacturer. It is his submission that despite this, the Bench has clearly held in favour of the assessee by rejecting the appeal filed by the Revenue. He would point out the commonness between the appellant's case and in the case of Innocorp Limited. It is his submission that as regards the supply of moulds free of cost by Symphony, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Abhishri in terms of agreement entered with M/s. Symphony and cleared to godown of latter, during the period November 2009 to March 2011 needs to be valued for the purpose of assessment of duty in terms of Rule 10A of the Valuation Rules, 2000, as held by the adjudicating authority or to be valued as per the provisions of Section 4(1)(a) of the Central Excise Act, 1944 as done by M/s. Abhishri. 9. The main appellant M/s. Abhishri in this case resorted to valuation of the goods manufactured and cleared i.e. Air Coolers based upon the agreement entered into with M/s. Symphony under the provisions of Section 4(1)(a) of the Central Excise Act, 1944. It is the case of the Revenue that there was massive under valuation and actually M/s. Abhishri is a job worker and is covered under the provisions of Rule 10A of the Valuation Rules, 2000 and should have discharged the duty based on the value on which M/s. Symphony has cleared the consignment of Air Cooler to their dealers/purchasers. 10. In order to appreciate the claim of the Revenue, it is imperative to reproduce the provisions of Rule 10A of the Valuation Rules, 2000. " RULE 10 A . Where the excisable goods are pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Air Coolers manufactured by them to M/s. Symphony on mutually agreed terms and conditions. 11. The above said agreement is interpreted by the adjudicating authority as to mean that M/s. Abhishri is a job worker on the following findings:- (i) That M/s. Symphony employed its own employees at factory of Appellant who are supervising and monitoring the production of Coolers on Random basis and reporting to M/s Symphony. (ii) That the purchase agreement does not provide the price of Air Cooler, however it is brought on records by investigation that apart from processing charges, cost of raw materials including that of bought out items and any other cost is charged on actual basis. (iii) That the Appellant is not an independent manufacturer and does not have the right to decide the suppliers. Rate and quantity of inputs. (iv) That the value indicated in invoice of Appellant was influenced by the cost of manufacture which were controlled by M/s Symphony as all the raw material/component wee procured on the basis of terms and conditions including price, quality, quantity etc as agreed upon by both. (v) That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in hand, should have manufactured the Air Cooler from the inputs or the goods supplied by M/s. Symphony. We find from perusal of the record that M/s. Abhishri had purchased the entire raw materials required for manufacturing Air Coolers and paid for the same. We also find that M/s. Abhishri had, received only moulds from M/s. Symphony for manufacturing of such Air Coolers. Supply of moulds per se, would not mean that appellant M/s. Abhishri is a job worker of M/s. Symphony, as tried to be made out by the adjudicating authority by reading explanation to Rule 10A of the Valuation Rules, 2000. 13. We find that there is no dispute as to the fact that M/s. Symphony had supplied moulds to M/s. Abhishri for manufacturing of Air Coolers. Non-inclusion of the amortized cost of such moulds, in the value of Air Coolers sold by M/s. Abhishri to M/s. Symphony, would, at the most require redetermination of value, read with provisions of Rule 6 of Valuation Rules, which talks about determination of correct value, even for the transaction falling under the ambit of Section 4(1)(a) of Central Excise Act, 1944. When we apply the said rules, we find that the provisions of Rule 6 would apply in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Teggas Industrial Development Ltd. vs. CCE, Kanpur [1989 (39) ELT 151(Tri.)] relied on by the adjudicating authority. 4.3 From the various clauses of the agreement between INNOCORP/DART and TUPPERWARE, it can be implied that the transactions were not at arms length [Clauses 6.5, 9, 11 and 12 of the INNOCORP-TUPPERWARE agreement and Clauses 6.4, 7.3, 9.2, 11 and 12 of the DART-TUPPERWARE agreement referred to by the appellant in this connection.] Some of the terms of the agreement implied that TUPPERWARE had proprietary interest in the goods manufactured by INNOCORP/DART, from the raw material stage itself. The agreement imposed many conditions on INNOCORP/DART and consequently they had very little liberty in the matters relating to production. Therefore the reliance placed by the Commissioner on the above case law is out of context. 4.4 The Commissioner held that the assessee was manufacturing the goods 'for' TUPPERWARE and not 'on behalf of' TUPPERWARE, without even attempting to justify such differentiation." It is can be from the above reading of the grounds of appeal before the Tribunal, the very same findings are recorded by the adjudicating aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f other clauses of the agreement, we have found these declarations contained in clause 23 to be true. 7.3 It is easily discernible from the agreement (a) that the assessee was appointed by TUPPERWARE, on a principal-to-principal basis, to manufacture the products as per the latter's specifications and to sell the goods to TUPPERWAR, (b) that TUPPERWARE was liable to pay to the assessee the price of the goods invoiced by the latter as per the settled cost quotations for the product, (c) that the raw materials and packing materials required for the manufacture of the goods were to be sourced by the assesse from suppliers named by. TUPPERWARE, (D) that none of the suppliers was authorized by TUPPERWARE to supply the raw materials or packing materials to the assessee, (e) that the moulds supplied by TUPPERWARE to the assessee for manufacture of the goods were returned after use (without availing CENVAT credit), (f) that the brand name of TUPPERWARE WAS affixed on the products by the assessee as required by the buyer, (g) that the assessee indemnified TUPPERWARE against any losses, damages, liabilities etc. which might arise from the former's negligence or willful miscondu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in dispute that the necessary raw materials and packing materials were procured by the assesses from suppliers named by TUPPERARE. The cost of these materials were expressly recognized as expense of the assesses. That the suppliers were chosen by the asessees from a panel furnished by TUPPERWARE does not mean that the actual suppliers were authorized by TUPPERWARE to supply the materials to the assesses. In so far as the moulds are concerned, undisputedly, they were returned by the assesses to TUPPERWARE after use (without availing CENVAT credit)and the amortised value thereof was included in the assessable value of the finished goods. On these facts, it has to be held that the third condition also remains unfulfilled in this case. In the result, the respondents in these appeals were not manufacturing the subject goods as job workers "on behalf of" TUPPERWARE. Needless to say, therefore, that Rule 10 A was not applicable to the assessment of the subject goods. 7.6 We have also perused the text of the order passed by this Bench in the case of Coromandel Paints Ltd. (Supra). The assessee in that case was engaged in the manufacture of paints, varnishes and thinners. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MANDEL's case to distinguish it from the present case. In that case, this bench had noted that there was no evidence of return of unused materials, scrap etc. to SIPL. In the present case, such materials were to be returned to TUPPERWARE. But, then, the cost of these materials could be billed by the manufacturer to be paid by TUPPERWARE vide clause (11) of TUPPERWARE-DART agreement, which arrangement also reflected a seller-and-buyer relationship between the parties. 7.8 In COROMANDEL's case, this Bench also found that their case. Was supported by the decision of a coordinate Bench in the case of Gillete Diversified Operations Ltd. vs. CCE, Chennai [2007 (217) ELT 0551 (Tri. Mad.)]." It can be seen from the above reproduced finding that the issue involved in this case is squarely covered by the decision of the Tribunal in the case of Innocorp Limited (supra). We would hasten to hold that in the case of Innocorp Limited, the agreement clauses as reproduced in paragraph 2.1 of the said order are more stringent than the clauses of agreement in the case in hand, inasmuch as the Tupperware had strict quality control procedure set up, were also controlling and directing M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en that the stay order which is passed on 10.9.2012 is an order which is a prima facie order and is not a final order. The order of the Tribunal in the case of M/s. Innocorp Limited is a final order, this order though was referred to in the stay order, since the issue needed analysis, the said stay order directed the appellants therein to deposit an amount including M/s. Symphony who was a common party. In our considered view, the findings recorded by a Bench in stay order are prima facie findings and cannot be held as having binding for final disposal of the appeals. As regards the judgment relied upon by the learned Additional Commissioner (A.R.) on the case of Lamina International as has been decided by the Hon'ble High Court of Karnataka, we find that the issue involved in that case was totally different. It is seen from the judgment that M/s. Lamina International and M/s. Lamina Suspension Limited are working out of one premises and both the units were under control of the appellant M/s. Lamina International and there was an understanding between both M/s. Lamina International and M/s. Lamina Suspension Limited to avail benefit of rebate of the duty paid on the goods exported, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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