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TMI Blog2019 (12) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... issues in the hands of principal manufacturer to conformity with place of removal . The belated interpolation of rule 10A in the said Rules also points out to the same want of definition. In effect, a job-worker works on raw materials supplied by the principal manufacturer and is denied an option to sell the goods that emerge thereby and, in that context, the liability fastened on to someone, other than the manufacturer, on the basis of contract of price. It is seen from the records that on a former occasion when the taxability of set-top-boxes and non-inclusion of the value of material supplied therewith, rule 6 of the said Rules was held to be appropriate in accordance with rule 10A - The job-worker has been held to be a manufacturer on behalf of principal-manufacturer and the supply of inputs for goods by either the principal-manufacturer or any other person authorized by him, to suffice as job-worker . The definition of job-worker , as incorporated in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 would not cover the transactions, as well as the activities, that characteristic occur in the present dispute - Resort to ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Tecnicolor India Pvt Ltd makes it clear that the manufacture is not merely on account of the latter and draws our attention to the impugned order-in original no. 08/CEX/2009-10 dated 31st August 2009 of Commissioner of Central Excise, Pune III which has held that 47. The statement of the officials of the noticee as well as M/s TH1PL, the contents of MOU, the AVL, quantity supplied by M/s. THIPL along with BOM clearly indicate that the price of STBs is fixed on the basis of the PO by M/s THIPL, the prices of raw material / inputs are controlled by M/s THIPL by way of BOM and the vendors are authorized by way of AVL issued by M/s THIPL. It is also observed that M/s THIPL identified their sister concern M/s Thomson Broadband UK Limited ( TBUK ) as the authorized vendor for the procurement of Key components by the noticee. Thus, M/s THIPL indirectly supplied the inputs to the noticee from their sister concern at the price controlled / approved by them. It is further observed that the noticee manufactured STBs exclusively for M/s THIPL. Thus, it is clear that the said STBs were manufactured by the noticee on behalf of M/s. THIPL on job work basis. It is also obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Central Excise, Belapur [2013 (292) ELT 59 (Tri.-Mumbai)] and the affirmation thereof by the Hon ble High Court of Bombay in Hyva (India) Pvt Ltd v. Union of India [2015 (327) ELT 41 (Bom.)]. 4. Learned Counsel for the assessee-appellant contends that the activities, incorporated in the self-contained memorandum of understanding dated 6th March 2006 between the appellant-company and M/s Thomson Holding (India) Pvt Ltd (as it then was), had contracted for procurement of set-top boxes to be supplied to M/s Tata Sky Ltd. The bill of materials, and authorized vendor list, issued to the manufacturer by M/s Tecnicolor India Pvt Ltd also cannot be inferred as anything other than that of manufacture as a principal. It is further submitted that a particular category of inputs designated as key components was to be supplied by M/s Thomson Broadband (UK) Ltd on order placed by the appellant. Furthermore, it is submitted that Thomson control parts and manufactured control parts were to be supplied by the vendors enumerated in the list approved by M/s Tecnicolor India Pvt Ltd. It is contended that the earlier proceedings relating to valuation had been settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption and, in the absence of any specific rule to govern the valuation for ascertainment of liability when discharged by job-worker, the authority of Ujagar Prints Ltd etc. v. Union of India v. [1989 AIR 516] was drawn upon. The blurring of distinction between job-worker and principal manufacturer , except for determination of commercial equation, reduced the valuation issues in the hands of principal manufacturer to conformity with place of removal . The belated interpolation of rule 10A in the said Rules also points out to the same want of definition. 7. In effect, a job-worker works on raw materials supplied by the principal manufacturer and is denied an option to sell the goods that emerge thereby and, in that context, the liability fastened on to someone, other than the manufacturer, on the basis of contract of price. It is seen from the records that on a former occasion when the taxability of set-top-boxes and non-inclusion of the value of material supplied therewith, rule 6 of the said Rules was held to be appropriate in accordance with Rule 10A -- Where the excisable goods are produced or manufactured by a job-worker, on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the fundamental difference lies in the payment effected by the appellants to the supplier of the approved raw materials. In Commissioner of Central Excise, Hyderabad v. Innocorp Ltd [2012-TIOL-956-CESTAT-BANG], it was held that 7.4 It is true that stringent quality standards were prescribed by TUPPERWARE to be strictly maintained by the manufacturers at every stage of the manufacture. TUPPERWARE could inspect the process of manufacture to ensure that the specified quality standards for the products were being maintained. They also had the liberty to reject the finished goods which did not conform to the specified standards. These things are part of normal commercial practice in respect of business houses who insist on the quality of their merchandise. These cannot be considerations to hold that the manufacturing activities of the assessees were under extensive control of TUPPERWARE reducing the status of the manufacturers to job workers. That the brand name of TUPPERWARE was affixed on the finished goods by the assessees is also immaterial. In this context, in our view, the learned Commissioner is justified in having claimed support from the decisions in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the contracting parties. The specific clause No. 11 of the agreement in no way suggests anyone to take a view that the appellant was a job worker of SIPL. Further, we find that clause No. 15D of the said agreement which we are reproducing herein under would indicate the relationship between the appellant and SIPL. 15D. This agreement is devised as AGREMENT FOR MANUFACTURE AND SUPPLY OF PAINTS for the limited purpose of defining the remuneration/margin of profit eligible to be retained by M/s. Coromandel Paints Ltd., Visakhapatnam, in pursuance of this agreement. The production and supply of paints by Coromandel to Sigmakalon will be on principal to principal basis and all applicable taxes on such sale shall be paid by Coromandel at the time of its supply. For all statutory purposes, including payments of taxes, compliance of labour and other loss, including the responsibility of manufacturing quality paints as per the prescribed specification, M/s. Coromandel Paints Ltd. shall be manufacturer and is expected to discharge the entire liability cast on them as manufacturer, under this agreement. Excise duty, sales tax and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the transaction between Sujhan and Honeywell to be one of principal to principal basis. The arrangement between Sujhan and Honeywell, in our view, is on the lines of contract manufacturing as distinguished from job worker . The contract manufacturers are not supplied with the raw material from principal manufacturers, like job workers , but they are required to purchase them from the market, very often from vendors who are approved by the principal manufacturer for quality point of view. The principal then buys finished products from the contract margin and very often sales them to his core customer, sometimes with enhanced margin. Department has also not unearthed or brought out anything on record to suspect that the contract between Sujhan and Honeywell is only a camouflage for job working. There is also no evidence put forth to indicate that apart from the value invoices by Sujhan to Honeywell there is an additional value component which is separately paid by the latter to the former or that there is any additional flow back of funds. This being the case, there is no reason on account of invoice value between Sujhan and Honeywell should not be treated as the ―t ..... 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