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TMI Blog2020 (3) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... ve its own Radial Drilling Machine for enabling machining of certain tractor components; that the price of individual components would be finalized after development of tractor components based on machine-hour rate, operation time, overhead, profits to be worked out on the basis of volumes projected by M/s. M & M, etc.; that therefore, since the goods manufactured for M/s. M & M were being captively consumed, the assessable value was required to be arrived at on costing basis in terms of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Rule 10A ibid, according to which the costing should include an additional 10% of the production cost. 2. Show Cause Notices were issued proposing to demand duty short paid in respect of the clearances made by the appellant to M/s. M & M for various periods under Section 11A (1) of the Central Excise Act, 1944 along with applicable interest and penalty. 3.1 The appellant thereafter filed detailed replies highlighting the clauses in the agreement that, in essence, the manufacture was on principal-to-principal basis which was sold to M/s. M & M. It was further pointed out that though raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,644/- Medchal 7.2 He also relied upon the decision of the Co-ordinate Ahmedabad Bench of the Tribunal in the case of M/s. Rolastar Pvt. Ltd. Vs. Commissioner of Central Excise, Daman reported in 2012 (276) E.L.T. 87 (Tri. - Ahmd.) and contended that the issue has already been decided and hence, no more res integra. 8. Per contra, Ld. Departmental Representative for the Revenue supported the findings of the lower authorities. 9. We have heard both sides and perused the documents placed on record. 10.1. The agreements are placed on record and a perusal of the same makes it clear that there was no scope for treating the appellant as an agent of M/s. M & M in any respect and for any purpose whatsoever. It is also made clear that M/s. M & M has agreed to purchase the components from the appellant and further, it has also an insurance clause requiring insuring of premises as well as the equipment with premia being paid by the appellant. 10.2 There is no dispute that the appellant has in fact discharged the duties before supplying the goods in question to M/s. M & M which is based on the purchase price, as given in the respective agreements. This indicates that the goods in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the captive consumption of the goods by the manufacturer himself or on his behalf. 7. We find that an identical issue in the case of Advance Surfactants India Ltd. (supra) came up before the coordinate Bench of the Tribunal in Bangalore, wherein I was one of the Member and the Bench took the following view. "7. On these factual matrix we need to appreciate the provisions under Rule 10A, which is reproduced herein under : "RULE 10A. Where the excisable goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then,- (i) in a case where the goods are sold by the principal manufacturer for delivery at the time of removal of goods from the factory of job- worker, where the principal manufacturer and the buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the transaction value of the said goods sold by the principal manufacturer; (ii) in a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of the job-worker, but are transferred to some other place from where the said g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill apply. In order to understand the Revenue's case, we reproduce the provisions of Rule 8. "RULE 8. Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the values shall be [one hundred and ten per cent of the cost of production or manufacture of such goods." 7.2. It can be seen from the above reproduced Rule that this will come into play only when the goods are used for consumption by the assessee or on his behalf, in the production or manufacture of other articles, in such a case the value shall be 110% of the cost of production or manufacture of such goods. If this rule needs to be applied in the case, then it is to be on record that LABSA is a product of the appellant herein and is consumed by HUL on appellant's behalf or the said products are consumed by some other job worker of the appellant, in his factory for further manufacturing of goods. In the absence of any such situation, we are of the view that provisions of Rule 8 will not come into play. As already reproduced herein above, it is undisputed that LABSA is manufactured by job worker and cleared to HUL for f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the mandate of the said Rule 8 of Central Excise Valuation (Determination of Prices of Excisable Goods). Rules, the said clarification is untenable and has to be held as such. 9. We find that our above view has been confirmed by the Bench in the Tara Industries Ltd-case (supra). We may reproduce the said ratio. "2. The appellants manufacture 'wool Tops, on job work basis out of raw wool received from parties for whom the job work is undertaken. They worked out the assessable value (for Central Excise purposes) of wool tops as the aggregate of the cost of raw material and their job work charges and paid duty on the basis of such assessable value under the impugned order, differential duty has been demanded on the basis that the goods should have been valued under Rule I of the Central Excise Valuation Rules, 2000 which came into force w.e.f. 1-7-2000. We read that Rule : "Rule 8. Where the excisable goods are not sold by the assessee but are used for consumption or on his behalf in the production or manufacture of other articles, the value shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods" A perusal of the above Rule make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufactured on job work basis after 1-7-2000 will continue to be valued in the same manner as they were being valued before 1-7-2000. In other words, after 1-7-2000, in respect of goods manufactured on job work basis, valuation would be governed by Rule 11 of the new Valuation Rules of 2000 read with Rule 6 read with the above two decisions of the Apex Court." 3. It is clear from the above two paras of the Circular that goods produced on job work basis are required to be valued according to the rule laid down by the Apex Court's Judgment in the case of Ujagar Prints Ltd. [1989 (39) E.L.T. 493 (S.C.) = (2002-TIOL-03-SC-CX.)] even after 1-7-2000. The original valuation and payment of duty took place according to the principle of valuation approved by the Apex Court. The impugned orders are contrary to the specific provisions of valuation rules as well as clarification issued by the Central Board of Excise and Customs. They are required to be set aside. We do so and allow the appeals. In view of our disposing of the appeals themselves, stay petitions do not survive." 10. In yet another case, this Tribunal has very clearly held that provisions of Rules 8 not applicable to a situati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (1) of Section 4 of Central Excise Act, 1944. Keeping this in mind, we find that the ratio laid down by the Hon'ble Supreme Court in the case of Ujagar Prints and followed by various other decisions of this Tribunal and accepted by Revenue in their various Circulars will squarely apply i.e. to ascertain the assessable value on the cost of materials plus processing charges. In our view, the appellants have been correctly valuating their products by adopting this method. 12. We find that the judgment relied upon by the learned SDR of this Bench in the case of Ultrapack is on a different set of facts i.e. in that case, the 'Ultramarine blue' was sent in bulk form by M/s. Reckitt Benckiser India Ltd. and the said product was repacked by the assessee, for Reckitt Benckiser India Ltd. and hence it was held that Rule 8 will be applicable. It can be seen that in that case, Rule 8 was invoked because it was undisputed that repacking was done on behalf of Reckitt Benckiser India Ltd which would clearly attract the provisions of Rule 8. The situation in the current appeal before us is totally different which has been set out by us in the earlier paragraphs. In view of this, the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w material. He is not the manufacturer who is further consuming the goods captively for his own manufacturing activities. The fact, whether the person who has sent the raw material and to whom the final products stand cleared by the job worker has used the same captively or has sold the same in market, would not change the situation, so as to not to apply the principles laid down by the Hon'ble Supreme Court in the case of Ujagar Prints for the purpose of arriving at the assessable value." After noting the above, the Bench felt it proper to set aside the impugned order. 12.1 It was also brought to our notice that the above decision of the Tribunal has been upheld by the Hon'ble Supreme Court by dismissing the Civil Appeals filed by the Revenue in Civil Appeal Nos. 1988-1989 of 2012 with C.E.A. Nos. 3606-3609 of 2012 [reported in 2013 (298) E.L.T. A186 (S.C.)]. 12.2 Interestingly, Ld. Advocate for the assessee brought to our notice that for subsequent different periods, the Ld. First Appellate Authority was pleased to accept the assessee's contentions against similar demands of valuation and vide different orders viz., Order-in-Appeal No. HYD-EXCUS-MD-AP2-0101-18-19 - CE dated 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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