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TMI Blog2018 (7) TMI 1590X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the cost of bought out lid supplied along with drums is includible in the assessable value of drums? - Held that:- For the manufacture of drum there is no role of lid. The drum is manufactured without lid. It is also noticed that in the previous occasion appellant had been supplying the drums without lid. It is also fact that in all cases of manufacture and supply of drums lid was not supplied. However, only in some cases and for limited period bought out lid was supplied along with drums - the cost of lid cannot be included in the value of drums - demand set aside. Whether the profit element appearing in balance sheet of the appellant is includible in the assessable value of the drum when the fabrication cost paid by the principle, M/s. BPCL and HPCL as already been included? - Held that:- Profit which is appearing in the balance sheet is arrived out of receipt of fabrication charges which already included profit which is appearing in the balance sheet. There is no case of the department that appellant have received some additional consideration over and above the job charges received from the principals HPCL and BPCL, therefore profit appearing in the balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CL for the period From April, 2003 to May, 2007 and applied for provisional assessment since landed cost of CRS sheets and fabrication cost was not known to the appellant at the time of removal. Once the C.A. certificate issued by HPCL and BPCL, appellant filed final price list with the department for finalisation of provisional assessment, wherever final value computed by the appellant was higher than the provisional value adopted at the time of removal, Appellant paid the differential duty and interest. The Asstt. Commissioner finalised the provisional assessment for the clearance made during the period April 1997 to June 2007. As per the said Order-in-Original, the differential duty payable was ₹ 53,53,028/-. However, the Commissioner vide Order-in-Original directed appellant to pay differential duty of ₹ 75,40,706/- along with interest. As per the order demand was confirmed on four counts: (a) Lid supplied with the MS Drums are essential parts of the drums therefore value of lid is includible in the value of drums supplied. (b) The outward transportation charges is includible in the assessable value as transportation is the responsibility of the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants were not charging a composite price and were showing the amount of duty separately. (f) The amount of duty paid in excess by the Appellants cannot be adjusted against the short payment of duty. In view of the decision of the Bombay High Court in the case of CCE Vs. Standard Drums and Barrel Manufacturing Co. 2006 (199) ELT 590 (Bom.) wherein it was held that excess duty paid can be given back to the assessee only in accordance with Section 11B of the Act. Further, the Appellants were not able to prove that the duty incidence has not been passed on. Against the aforesaid Order-in-Appeal dated 20.2.2009, the Appellants filed an appeal (E/357/2009) before the CESTAT along with stay application. At the time of hearing the stay application, the CESTAT found that the appeal filed by the Appellants is premature and the same is dismissed with liberty to file stay application fresh when the duty is quantified and demanded from the Appellants. As directed by the Commissioner (Appeals) in the Order-in-Appeal dated 22.9.2009, the Deputy Commissioner granted personal hearing, after 4 years, on 6.1.2014. The Deputy Commissioner simply relying on the observations given by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial by the adjudicating authority in the Order-in-Original dated 19.2.2014 is beyond the remand direction given by the Order-in- Appeal dated 20.2.2009 of the Commissioner (Appeals). Further, the department had never disputed the cost of raw material of steel drums as taken by the Appellants on the basis of certificate of BPCL and HPCL, at any stage of proceeding. Hence, the demand of duty of ₹ 1,81,43,385/- on account of enhancement of cost of raw material is unsustainable in law on this ground itself. Demand is not sustainable as the additions made to the assessable value of Drums in respect of cost of lids, profit element, sale proceeds of scrap and figures taken as cost as per CA certificate is incorrect. B. The Appellant have correctly paid duty on the assessable value of the Drums sold. However, the Commissioner (Appeals) has confirmed the demand on the following items. The Appellants submit that the demand on the following items is incorrect on the following grounds: Addition in respect of Grounds for not including the same in the assessable value (I) Different rates for unit cost of Drums, fabrication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants submit that the lids are not essential parts of the drum manufactured and sold by the Appellants. It is evidenced by the fact that the appellants have sold the MS drums on a standalone basis i.e. without lids, in the past. The appellants would not be in a position to clear only MS drums if the lids were an essential part of the MS Drums. (d) For above submission, the Appellants place reliance on the following judgements: (i) Bombay Tubes Containers Vs. CCE 2000 (122) ELT 388 (T) (ii) A.Z. Metal Industries Vs. CCE 1992 (62) ELT 724 (T). (III) Profit Element Undisputedly, the fabrication charges are included in the assessable value on which duty stands discharged. The profit forms part of the fabrication / conversion charges. The Deputy Commissioner, over the above the fabrication charges, once again added profit element taken from the balance sheet. It is incorrect to enhance the value by including the profit margin when fabrication /conversion / job charges is already included in the value. Kindly refer following judgements: (i) Ravi Steel Industries Vs. CCE 2014 (308) ELT 694 (T) (ii) Advance Engineer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the appellants have included the profit margin of the appellants. Consequently, there would have been no case to demand any duty from the appellants. C.5 Even though the procedure for movement of the inputs under the Cenvat Credit Rules, 2004 was not followed by the appellants in the present case, the availability of the alternate procedure under which no duty is payable clearly shows that there could not be short levy or short payment of duty. C.6 The aforesaid submission that no duty is payable by the appellants on the goods manufactured on job work basis out of the raw material supplied by inputs suppliers is supported by the decision of the Supreme Court reported at 2005 (183) ELT 239 (SC) in the case of International Auto Products Ltd Vs. CCE in Civil Appeal No. 176 of 2000 and in the case of Jay Yuhshin Ltd Vs. CCE in Civil Appeal No. 4086-87 of 2001. C.7 The aforesaid decision of the Hon ble Supreme Court in the case of Jay Yuhshin squarely applies in the present case. Duty paid on inputs used in the manufacture of final products is not includible in the value of final products. D.1 The Appellants submit that the Excise Duty on raw material is included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation order is subjected to unjust enrichment. This provision applies only in cases where excess payment of duty is adjusted with the short payment of duty and still there is excess payment of duty. The refund of such excess payment alone would be subjected to unjust enrichment. F.2 The Appellants submit that since they have cleared goods after provisionally assessing the same, the authority should have adjusted the excess payment of duty with short payment of duty and the principle of unjust enrichment is not applicable for such excess payment which is to be adjusted with the short payment of duty. The Appellants rely on the following judgements in support of this submission: (a) Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. Commissioner 2012 (276) ELT 332 (Kar.) (b) Jonas Woodhead Sons (I) Ltd. Vs. Commissioner 2015 (329) ELT 577 (T) (c) Essar Steel India Ltd. Vs. CCE 2017 (345) ELT 139 (T). F.3 The Appellants further submit that they had deposited an amount of ₹ 28,45,147/- and ₹ 4,62,477/- whereas the Order-in-Original only appropriate an amount of ₹ 26,50,155/-. Hence, the impugned Order-in-Original has taken incorrect figures of payment and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Vs. Frick India Ltd [2007(216)ELT 497(S.C.)] (h) MIL India Ltd Vs. Commissioner of C. Ex. Noida [2007(210) ELT 188(S.C.)] (i) India TIN Industries Ltd Vs. Commissioner [2000(125) ELT 864(Tri.)] (j) Commissioner Vs. Ankur Packaging Pvt Ltd [2015(320)ELT 482(Tr. Mum)] (k) Ferro Alloys Corporation Ltd Vs. Commissioner [2007(216)ELT 713] (l) Bansiwala iron Steel Rolling Mills Vs. Commissioner [2011(263) ELT 571(Tri. Del)] (m) Reddy Sons Vs. Commissioner [2001(137) ELT 679(Tri. Kolkata] (n) Nellai Concrete Products co. P. ltd Vs Commissioner [2013(296) ELT 132(Tri. Chennai)] 4. We have carefully considered the submissions made by both sides and perused the records. 5. We find that the issues to be decided by us in the present case are as under: (a) Whether the appellant have taken correct cost of raw material i.e. CRS sheets for arriving at correct assessable value. (b) Whether the cost of bought out lid supplied along with drums is includible in the assessable value of drums. (c) Whether the profit element appearing in balance sheet of the appellant is includible in the assessable value of the drum when the fabrication c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents merely because the appeal is pending for final disposal before the Appellate Tribunal. The appeal preferred by the Petitioners is only against imposition of penalty. The learned counsel for the Respondents was unable to show any provision in law indicating that the Revenue is entitled to detain the documents till the hearing and final disposal of the appeal preferred by the Petitioners. Therefore, we do not find any substance in the stand taken by the Revenue in refusing to return the Petitioners bills of entry and other documents. In view of the above order, it can be seen that it is appellant s appeal challenging the demand of ₹ 75,40,706/- therefore without filing an appeal by the department proposing enhancement of demand, appellant by filing an appeal cannot be in the worse position by which demand is increased therefore the demand of ₹ 75,40,706/- in any circumstance could not have been increased to ₹ 2,31,30,925/-. 7. As regard the inclusion of cost of lid, we find that for the manufacture of drum there is no role of lid. The drum is manufactured without lid. It is also noticed that in the previous occasion appellant had been supplying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed. In view of the position so settled, in the present case also, the demand raised against the appellants on the ground that they had discharged duty liability under Item 27 CET only on the aluminium collapsible tubes, and not on the tubes fitted with caps, is not sustainable. The impugned order is, therefore, set aside and the appeal allowed. In view of the above judgments which are on the identical facts, it is clear that cost of bought out lid cannot be included in the assessable value of the final product i.e. drums. We therefore hold that demand of duty to this extent will not sustain. 8. As regard the inclusion of profit element which is appearing in the balance sheet in the value of the drum for the purpose of charging excise duty, we find that as per Hon ble Supreme Court judgment in case of Ujagar Print the principle of valuation was categorically laid down, accordingly to which the method of valuation of job work goods is that value should be cost of raw material plus job work charges including the profit of job worker. We find that profit which is appearing in the balance sheet is arrived out of receipt of fabrication charges which already included pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- Para 4.The emphasise by the Commissioner on the contents of the circular of the Board does not really help the department s case. The Board s circular related to valuation of goods captively consumed, whereas we are concerned with the goods on job work. Apart from the fact that the Board circular required inclusion of an element of profit in the assessable value, the principle is an exception and by applying that principle, we have concluded that job charges would have included the profit. In case of Crown Tobacco Co. (supra) it was held that job charges covers manufacturing cost and profit of the job worker hence question of paying duty separately on manufacturing profit would not arise. In case of Jyoti structures Ltd (supra) this Tribunal held that profit element included in the job work charges, value declared by the job worker includes profit element only department put a case that any amount was collected from buyer as profit over and above the job charges. Value declared must be considered to have been included in the manufacture profit. In view of the above judgments on the identical issue the profit margin which was sought to be included by the Revenue is il ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quence as the principal manufacturer cleared the final product on payment of appropriate duty and the duty paid by the job worker on the intermediate product was available to the principal manufacturer as Cenvat credit. 9. After considering the judgment of the Apex Court in the Jay Engineering case and the International Auto case, the Tribunal, in P.R. Rolling Mills Pvt. Ltd. case (supra), held that the question of adding the value of scrap in the value of the intermediate product cleared by a job worker to the principal manufacturer did not arise. We find that in the Lawkim Ltd. case, the decision of the Tribunal was to the same effect. We note that the Apex Court, in the International Auto Ltd. case, held as follows in paras 6 and 7 of the judgment. 6.We are of the view that the submission of the appellant is correct. The Tribunal appears to have been confused between the manufacture of the final product, namely, excavators and the manufacture of the intermediate product, namely, the floor plate assemblies. The scheme of Modvat permits the person who clears the ultimate final product to take the benefit of the Modvat scheme at the time of clearance of such final prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls supplier would be entitled to credit or Intermediate goods could be returned without payment of duty under Rule 57F procedure. If the intermediary product is not liable for duty, the question of adding the value of scrap does not arise at all. In these circumstances, in our view, the value of scrap need not be included in the assessable value of the products manufactured by the appellant. 10. In view of the above judgments, the Tribunal has taken consistent stand that once the value of job work has arrived at by taking entire cost of raw material which includes portion of scrap value of scrap once again need not be included. The appellant also made submission that since appellant as well as principal are manufacturer and discharged the duty on the respective product alternate provision for job work i.e. Rule 4(5)(a) of Cenvat Credit Rules was available. According to which appellant were not required to pay any duty particularly for the reason that the principle on the manufacture of their final product i.e. bitumen discharged duty on the value which includes value of the drum supplied by the appellant. There is force in argument of the appellant that alternate provision doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the value of the free inputs were to be included in the final product. In that case, the final product was wagons and the question was whether the items which were supplied free by the Railway 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 is allowed. In case of P R rolling Mil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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