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TMI Blog2014 (4) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... luation of excisable goods required to be made is whether under Section 4 of the Central Excise Act, 1944, the transaction is one of sale or a case of manufacture of goods from inputs and goods supplied by principle manufacturer. In the later option, the manufacturer should get only the job charges for converting the inputs/goods but the predominant part of the inputs or goods is required to be supplied free of charge by the principle manufacturer to the job worker. Such supply of inputs/goods free of charge has not been established by the Revenue Valuation under Section 4(1) of Central Excise Act, 1944 is sought to be discarded on the ground that the price is not the sole consideration in these cases. In our view, in situations where price is not sole consideration, it does not mean that invariably Department has to resort to the valuation under Rule 10A of Central Excise Valuation Rules, 2000. In our view, the conditions required for bringing the assessee under the provisions of Rule 10A of Central Excise Valuation Rules, 2000 have not been properly appreciated by the adjudicating authority in this case - Following decision of Ravikiran Plastics Pvt.Ltd [2014 (2) TMI 211 - CES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B.E.D. Rs.7,33,09,828/- + Ed. Cess Rs.14,66,288/- + S H Cess Rs.7,33,099/-), which was short paid on account of wrong valuation of excisable goods i.e. in respect of non-retail pack automotive lubricants i.e. for packs of more than 25 ltr lubricants manufactured on job work basis from M/s PMIPL M/s ALSL, and order to recover the same from them under proviso to Section 11A(1) [now Section 11A(4)] of Central Excise Act, 1944. ii) I confirm demand of interest at the appropriate rate under Section 11AB (now Section 11AA) of Central Excise Act, 1944 from them in respect of (i) above. iii) I appropriate an amount of Rs.50,00,000/- of Central Excise duty vide PLA entry No.22, dt.05.12.2009, paid by them against their total duty liability, confirmed at (i) above. iv) I impose penalty of Rs.7,55,09,215/- upon the assessee under Section 11AC [Now Section 11AC(1)(a)] of Central Excise Act, 1944 on the amount of Central Excise duty demanded in (i) above. v) I do not impose penalty upon the assessee under Rule 25(1) of Central Excise Rules, 2002. vi) I impose personal penalty of Rs.30,00,000/- (Rupees Thirty Lakhs only) on Shri Nirmal R. Ruparel, Director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple to principle basis, recital of the agreement provides that the agreement is on principle to principle basis; that none of the signatories shall be treated as agent of one another in any form whatsoever; agreement provides that SGSPL is to act as an independent processor and manufacturer of lubricating oil and other speciality products; prior to 01.04.2007, Revenue never assessed the goods as being manufactured on job work basis and they have satisfied the condition of Section 4 (1)(a) of the Central Excise Act, 1944. It is also his further submission that there being a sale of lubricating oil to Petronas and Atlantic, there is a transfer of a possession for a consideration; the Tribunal in the case of M/s Innocorp Ltd - 2013 (289) ELT 172 (Tri-Bang) has held that the provisions of Rule 10A of Central Excise Valuation Rules, 2000 will not apply in such a situation. It is his submission that SGSPL were in existence as manufacturer of lubricant oil before they entered into agreement with Petronas or Atlantic. It is his submission the adjudicating authority has confirmed the demand on the ground that the Petronas and Atlantic had negotiated with the suppliers of additives and pack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Commissioner of Central Excise Service Tax, Vapi. It is his submission that various government audit teams and CERA audit had been undertaken during which time, it was never detected by the authorities. It is his submission that the demand is liable to be set aside on merit as well as on limitation. 6. Ld.Departmental Representative, on the other hand, would submit that the submissions of ld.Counsel are totally incorrect. It is his submission that the case of the Department is that the appellant is a job worker of Atlantic and Petronas and should have discharged the Central Excise duty liability on the value on which Atlantic and Petronas are selling the product into the market. He would take us through the provisions of Rule 10A of Central Excise Valuation Rules, 2000 and submit that the SGSPL has clearly satisfied the conditions in the said rule. It is his submission that SGSPL had been manufacturing the product from the inputs supplied by a person authorized by the manufacturer. It is his submission that though the inputs are goods or not supplied directly by Atlantic or Petronas, the goods or inputs are supplied by the persons who are in control of Atlantic and Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Motul ; and various other factors which are governing the transaction between Atlantic or Petronas with SGSPL, clearly indicate that there is neither sale nor the price is the sole consideration in this transaction. He would rely upon the judgment of Apex Court in the case of Fiat India Ltd 2012 (283) ELT 161 (SC) for the contention that when the price is suppressed for market penetration, it can be held that the price is not the sole consideration. He would submit that the ratio will directly apply to the case in hand. As regards the applicability of provisions of Rule 10A of Central Excise Valuation Rules, 2000, it is his submission that from the facts of the case, it is very evident that SGSPL had not satisfied the conditions mentioned therein and hence the judgment of the Tribunal in the case of Hyva (India) Pvt.Ltd. 2013 (292) ELT 59 (Tri-Mum) and Audi Automobiles 2010 (249) ELT 124 (Tri-Del) will apply wherein the Tribunal has taken a view that the provisions of Rule 10A will be applicable in the condition as is prevalent in this appeal. He would submit that the decision cited by the appellants counsel are not applicable in the case as they were distinguished by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ications etc. have been provided by the principle manufacturer to the Appellants; b) The Appellants are not ever allowed to mention its name as manufacturers (either principal or job worker); c) The Appellants' status is that of Job worker as defined in explanation to valuation Rule 10A; d) The material evidence on record suggest that the Appellants have merely acted as job worker in order to produce the goods on behalf of M/s Atlantic and M/s Petronas; e) The Appellants admit that brand nanies owned by Atlantic and Petronas have been used by them; f) No cost has been charged for supply of Motul Petronas brand names; g) The Buyers have indulged in price negotiation with the suppliers of additives, packing materials, which constitutes 20% of the total cost of automotive lubricants; h) The Appellants cannot be termed as independent manufacturer; i) The sale and production of lubricating oil was entirely and in totality controlled by M/s Atlantic and M/s Petronas and the Appellants at their own could neither produce any quantity of Petronas brand and Motus brand goods nor sell it to any independent buyers. j) If the entire transaction is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct. The factory set up and the employees who were engaged in manufacturing of the finished goods were undisputedly employed with SGSPL and quality was to be adhered as contracted with Atlantic and Petronas which was being checked by them by deputing their technical person. This itself would not mean that the SGSPL was a job worker of Atlantic and Petronas. 12.3 Thirdly, the valuation under Section 4(1) of Central Excise Act, 1944 is sought to be discarded on the ground that the price is not the sole consideration in these cases. In our view, in situations where price is not sole consideration, it does not mean that invariably Department has to resort to the valuation under Rule 10A of Central Excise Valuation Rules, 2000. In our view, the conditions required for bringing the assessee under the provisions of Rule 10A of Central Excise Valuation Rules, 2000 have not been properly appreciated by the adjudicating authority in this case. 12.4 Our above said views are fortified by the decision of this Bench on similar facts as is delivered in the case of Ravikiran Plastics Pvt.Ltd. - Final Order No.E/10112-10121/2014, dt.03.02.2014. We reproduce the relevant paragraphs as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be made is whether under Section 4 of the Central Excise Act, 1944, the transaction is one of sale or a case of manufacture of goods from inputs and goods supplied by principle manufacturer. In the later option, the manufacturer should get only the job charges for converting the inputs/goods but the predominant part of the inputs or goods is required to be supplied free of charge by the principle manufacturer to the job worker. Such supply of inputs/goods free of charge has not been established by the Revenue. Any amount of initiation taken and monitoring done by M/s Symphony does not make M/s Symphony as the free supplier of inputs or goods either directly or through any approved person. As per the language of Rule 6 of Central Excise Valuation Rules, 2000 also the money value of additional considerations flowing directly or indirectly from the buyer and seller is required to be quantified and added to arrive at the assessable value. Explanation 1 to Rule 6, as reproduced in Para 8 above, make it further clear that any such additional money value in the form of materials, components, parts, tools, dies, moulds, drawings, blue prints, technical maps, charts, value of engineeri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the OEMs are actually dummy concerns. Further option of redemption fine is given by the adjudicating authority only to the OEMs which means that status of ownership of goods lying with the OEMs and elsewhere has been accepted by the Revenue. 12. Ld.A.R. appearing on behalf of the Revenue strongly relied upon the case of Supreme Court in the case of CCE Mumbai Vs Fiat India Pvt.Ltd. (supra) to the effect that when the price is not the sole consideration of sale then valuation has to be done as per Rule 10A of the Central Excise Valuation Rules, 2000 which is more specific for valuation of goods in a job work contract. However, reliance placed by ld.A.R. on Fiat India case is misplaced because the Hon'ble Apex Court in Fiat India case (supra) interpreted a situation when an assessee was deliberately keeping the price of goods lower than the cost price to capture the market. Hon'ble Apex Court never said that if price is not the sole consideration then straight way the valuation should be done under Rule 10A of Central Excise Valuation Rules, 2000. As discussed above, even if price is not the sole consideration then also as per Rule 6 of Central Excise Valuation Rules, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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