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TMI Blog2023 (5) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 3. I impose a penalty of Rs.61,628/- (Rupees Sixty one thousand six hundred twenty eight only), under Section 11AC of the Central Excise Act, 1944 on the assessee." 2.1 During the course of audit, it was observed that the appellant had collected insurance premium from their customers which was more than the actual premium paid to the insurance company as indicated in the table below:- Year Premium received from the customers Premium paid to the insurance company Excess amount of premium 2003-04 Rs.576413/- Rs.126360/- Rs.450053/- 2004-05 (Upto July-04) Rs.198351/- Rs.32126/- Rs.166225/- Total Rs.774764/- Rs.158486/- Rs.616278/- 2.2 A show cause notice dated 30.04.2008 was issued to the appellant asking them to show cause as to why:- "i) The Central Excise duty amounting to Rs.61,628/- (Basic duty Rs.49302/- + Addl. Rs.12,326/- should not be recovered from them under Section 11A (1) of Central Excise Act, 1944. ii) Interest should not be recovered from them under section 11AB of Central Excise Act, 1944. iii) Penalty should not be imposed on them under Section 11A of Central Excise Act, 1944." 2.3 The show cause notice h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the cost of grey fabrics + job charges + manufacturing profit + manufacturing expenses incurred by the job worker. In this break up of costing the profit of the job worker would be included in the job charges payable by the merchant manufacturer for processing of the fabrics. The additional consideration in the form of "insurance charges collected by the appellant from the merchant manufacturers over and above their actual spending on this count would have to be considered as a profit accruing to the benefit of the job worker which if not collected separately under the head "insurance charges needs to be included in the job work charges recoverable from the merchant manufacturer. The method of valuation determined by the Hon'ble Supreme Court takes into account various elements for arriving at the cost of the processed fabric which if calculated in the stated manner would be very near to the sale price of the merchant manufacturer. The excess amount received by the job worker towards insurance charges over and above the premium paid by the job worker would surely contribute to the profitability of the activity and hence has to be held as a consideration received in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court in the case of Ujagar Prints (supra) and hence even otherwise the provisions of Rule 5 of the Valuation Rules would not find application. The case laws relied by the appellant on this count would also not come to their rescue for the same reason. 09. The appellant has further contended that during the period in dispute more than 70% fabrics were received for processing under Annexure-II Challans and the processed fabrics were cleared on without payment of excise duty and therefore the question of undervaluation of that much quantum of fabrics does not arise at all. It is observed that appellant has not adduced any evidence in support of their contention that even in the case of job work manufacturing without payment of duty under Rule 4 (5) of the Cenvat Credit Rules, 2004 read with Notification No. 214/86-CE dated 25.03.1986, they were required to insure the goods on behalf of their customers, without which it is not possible to consider this argument. 10. The appellant has further contented that the primary responsibility to pay duty on the fabrics got processed from the job workers was on the merchant manufacturers, during the period from 01.04.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected from a particular customer in this regard. Further, Revenue has not even disputed in the show cause notice that the job charges recovered by the appellant were suppressed in any manner for making the demand. 4.3 In the case of Baroda Electric Meters Ltd. [1997 (94) ELT 13 (SC)], Hon'ble Supreme Court has held as follows:- "The Tribunal accepted the position that equalised freight was charged by the appellant from everyone, but proceeded to say that even though freight cannot be a part of the assessable value that wherever freight actually paid was less than the amount collected by way of freight and transportation charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value. In our opinion, the Tribunal proceeded on an incorrect premise. It was clearly held in Indian Oxygen Ltd. v. Collector of Central Excise - 1988 (36) E.L.T. 723 (S.C.) = 1988 (Supp.) SCC 658, that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. In view of that decision, the view taken by the Tribunal cannot be sustained." 4.4 Following the above decision of Hon'ble Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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