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TMI Blog2007 (3) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... on job work basis for M/s. Tecumseh Products India Pvt. Ltd., Hyderabad, by non inclusion of the cost of material supplied free by M/s. Tecumseh Products India Pvt. Ltd., .and non inclusion of the sale proceeds of scrap generated during the course of manufacture and retained by the assessees, in the assessable value of goods cleared for M/s. Tecumseh Products India Pvt. Ltd., for the purpose of payment of Central Excise Duty, during the period December 2002 to 17 February 2005. There is no dispute as regards job work carried out by the assessees for others such as Godrej Boyce Ltd., and M/s. Kirloskar Copeland Ltd. 2. In respect of the goods manufactured on job work for M/s. Tecumseh Products India Pvt. Ltd., the assessees had received raw materials under duty paid documents issued by the supplier of the raw material and taken Cenvat credit thereon, and on conversion of raw materials into intermediate products, the appellants have cleared the same under Central Excise invoice on payment of Central Excise duty and received job charges. The Cenvat credit taken by the assessees on raw materials was utilized towards payment of duly on goods manufactured on job work basis and cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cess of Rs.93,964/- and proposing adjustment of the above amount already paid, proposing recovery of interest and imposition of penalty upon the assessee and upon Shri Pendse as well as upon Tecumseh Products India Ltd. for aiding and abet ting the offence committed by Lawkim Ltd. The notice was adjudicated by the Commissioner of Central Excise who rejected the defence of the assessee, distinguished the Apex Court's judgment in the case of International Auto Ltd., 2005 (1.83) E.L.T. 239 (S.C.) relied upon by the assessee, upholding the charge of undervaluation by Lawkim Ltd. and of abetment thereof by Tecumseh Products India Ltd. and thus confirmed the duty demand raised in the notice together with interest and imposed penalty of .amount equal to the duty + education cess as well as penalties of Rs. 5,00,000/- each upon Tecumseh Products India Pvt. Ltd. and Shri Pendse. Hence these appeals. 4. We have heard both sides. 5. It is not in dispute that the inputs for stator laminations and stator stacks manufactured by the assessee and cleared to M/s. Tecumseh Products India Pvt. Ltd. were duty paid and that they were purchased by M/s. Tecumseh Products India Pvt. Ltd. and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... job worker's end itself or from the factory of the raw material supplier. The rule requires the input supplier to pay duty on the intermediate product if it is not used further in the manufacture of final product and does rot require the job worker to pay duty on the intermediate product. The same position prevailed under the erstwhile Central Excise Rules as seen from Rule 57F(4) irrespective of the fact that the goods manufactured by the job worker out of inputs received under Rule 57F(4) were not covered under Notification 214/86-C.E., dated 25-3-1986 as amended. In the cage of International Auto Ltd. cited supra, the apex court held that when inputs on which credit is taken are removed under Rule 57F(2)(b) of the Central Excise Rules, 1944, which is similar to Rule 4(5)(a), to the job worker in the manufacture of intermediate product, then the intermediate product manufactured by the job worker is not liable to duty in terms of the rule. The above decision also disposes of Civil Appeal Nos. 4086-87 of 2001 of Jay Yuhshin Ltd. Jay Yuhshin Ltd. was engaged in the manufacture of floor plates, parts and accessories of goods falling under Chapters 83, 84 and 87 of the schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. That case has no doubt held that the value of the free inputs were to be included 'at in the final product. In that case, the final product was wagons and the re question was whether the items which were supplied free by the Railway or Board to the assessee could be included in the value of the wagons. This Court came to the conclusion that it could. The first distinguishable feature is that this Court in that case was neither concerned with the Modvat scheme, nor with the provisions of Rule 57F(2)(b). Furthermore, the Court was not considering a situation where the question was of the liability of an intermediate product being subjected to excise duty. What was in consideration was the final product, namely, wagons. 7. In this appeal as we have already noted, the final product was the excavator. According to the Modvat scheme, it is the Modvat of such final product which would have to include the cost of the inputs and in respect of which Modvat credit could be taken at the time of clearance of the final product. The Tribunal having misconstrued the provisions of Rule 57F(2)(b), its decision cannot stand. The decision of the Tribunal is accordingly set aside and the appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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