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TMI Blog2023 (2) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be included in the assessable value of job worked goods being cleared on payment of duty to the principal manufacturer. The retention of scrap/ waste arised during job work does not depress the job work conversion charges, the same are not included in the assessable value. There are no merits in impugned order or the submissions made by the authorized representative - appeal allowed. - Hon ble Mr. Sanjiv Srivastava, Member (Technical) And Hon ble Dr. Suvendu Kumar Pati, Member (Judicial) For the Appellant : Shri Rajesh Ostwal with Shri Saurabh Bhise, Advocates. For the Respondent : Shri Sunil Kumar Katiyar, Assistant Commissioner, Authorised Representative. ORDER PER: SANJIV SRIVASTAVA These appeals are directed against impugned order in original No 07/2009/C dated 01.06.2009 of the Commissioner Central Excise Nagpur. By the impugned order following has been held: 3.3.1 I confirm the demand and recovery of Central Excise Duty of Rs 1,15,44,696/- (Rupees One Crore Fifteen Lakhs Forty Four Thousand Six Hundred and Ninety Six only) (BED Rs 1,12,82,522/- + Ed Cess Rs 2,20,463/- + HS Cess Rs 41,711/_) as detailed in Annexure A B from them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Impugned goods should not be confiscated under Rule 25 of central Excise Rules, 2002. 2.3 Show cause notice also called on Appellant 2 who is Managing director of Appellant 1, to show cause as to why penalty under Rule 26 of the Central excise Rules, 2002 should not be imposed on him. 2.4 Show cause notice has been adjudicated as per the impugned order referred in para 1 above. Aggrieved appellants have preferred these appeals. 3.1 We have herd Shri Rajesh Ostwal and Shri Saurabh Bhise, Advocates for the appellant and Shri Sunil Kumar Katiyar, Assistant Commissioner, Authorised Representative for the revenue. 3.2 Arguing for the appellants learned counsel submits that the issue involved in the matter is no longer res-integra and has been decided in their favour in their own case vide Order in appeal no NGP/EXCUS/000/APPL/257-260/16-17 dated 22.09.2016. Similar view has been taken by the tribunal in cases of a. Raaja Magnetics Ltd [2017-TIOL-1420-CESTAT-Bang] b. Reclamation Welding Ltd. [0214 (308) ELT 542 9T-Ahmd)] c. Osho Forge Ltd [2017 (3) TMI 1442 -CESTAT Chandigarh] d. P R Rolling Mills [2010 (249) ELT 232 (T-Bang)] affirmed at [2010 (260) ELT A84 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw material in accordance with the Standard Principles of Costing and the assessee also relied upon the two decisions of the Tribunal in support of their submissions. The Commissioner (Appeals) vide the impugned order allowed the appeal of the assessee and set aside the Order-in-Original. Aggrieved by the said order, the Revenue has filed the present appeal. 3. Heard both the parties and perused the records. 4. The learned AR for the Department submitted that the impugned order passed by the Commissioner (Appeals) is contrary to the law and is not sustainable and is liable to be set aside on the ground that the learned Commissioner (Appeals) has not appreciated that the value of the scrap arisen during the manufacture of finished goods retained and sold by the job worker on payment of appropriate duty is includable in the assessable value of the finished goods. He further submitted that the Commissioner (Appeals) has wrongly relied upon the case laws viz. Lloyds Steels Inds. Ltd. Vs. CCE, Nagpur [2003 (163) ELT 128 (Tri. Mumbai)] and Mahindra Ugine Steel Co. Ltd. Vs. CCE, Pune [2003(157) ELT 435 (Tri. Mumbai)] = 2003-TIOL-88- CESTAT-MUM. He further submitted that the fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld by the Apex Court, we find no infirmity in the impugned order passed by the Commissioner (Appeals) and therefore, we uphold the impugned order and dismiss the appeal of the Revenue. 4.3 Commissioner (Appeals) has in the appellant own case following the decision of P R Rolling Mills has allowed the appeals observing as follows: 19. The appellant further contended that the issue has been resolved beyond any doubt by the decision in the case of P R Rolling Mills Pvt. Ltd. Vs. CCE 2010 (249) ELT 232 where in the Hon'ble CESTAT after considering the concept of valuation as per Standard Accounting Practice based on the costing principles, held that the value of the waste and scrap is not liable to be included in the assessable value of the final products manufactured on job work basis. The department had challenged the above decision of the CESTAT before the Supreme Court of India. The Apex Court dismissed the civil appeal of the department as per the order reported at 2010(260) ELT A-84. 20. I observed that the Department alleged that the valuation of the goods cleared by Appellant under job work are as per the cost arrived at as per CAS -4 plus 10% i.e. as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the job worker. 24. Departments allegation further states that, as per Boards' circular No. 519/10/2002-CX dated 19th February 2002 the provisions of Rule 6 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 are to be applied for the valuation of job worked goods. After insertion of Rule 10A(iii) w.e.f. 01/04/2007 in the Central Excise Valuation Rules, as a natural corollary, Rule 10(A)(ii) will, as per the guidelines contained in the above Boards' circular, be again read with Rule 6 of the Valuation Rules for the valuation of job worked. goods. The said Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 provides that the money value of any additional consideration flowing directly or indirectly has to be included in the assessable value. So, in the instant case, the money value of the scrap retained represents additional consideration for the job worker. which has to be included in the assessable value of job worked goods as per the above provisions of law. 25. In case of Commissioner of C. Ex. Nagpur Vs. Llyods Steel Industries Ltd. 2007(213)E.L.T. 339(SC), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the goods cleared by the appellants to M/s. WIL. The appellant strongly pleaded that the value of scrap cannot be included twice. The main argument was that while estimating the value of the products manufactured by the appellant on jab work basis, the value of the entire raw material received has been taken into account. It was also pleaded that the scrap separately has been cleared on payment of duty, hence, there was no need for including the value of the scrap in the assessable value again. It was stated that this would amount to addition of the value of the scrap twice. A decision of this Bench in the case of Consolidated Engg. (supra) has also been relied on. 6.1 In the present case, the raw material is received from M/s. WIL which is obtained from Visakhapatnam Steel Plant. These raw materials are given to the appellant for conversion. A similar issue was dealt by the Supreme Court in the case of General Engineering Works (supra) and it was held that in such circumstances the value of the scrap should be included to the value of the goods produced by the job worker. However, similar issue was considered by the Hon'ble Apex Court in the case of Interna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material. It is also not in dispute that the assessee had taken Cenvat credit of the duty paid on such inputs and passed on the benefit to M/s. Tecumseh Products India Pvt. Ltd. In terms of Rule 4(5)(a) of the Cenvat Credit Rules, a manufacturer of final products can take credit on inputs received in its factory and send them to the job worker for the manufacture of intermediate product and receive the same for use in the manufacture of final products. Rule 4(5)(a) reads as under:- Rule 4(5)(a): The Cenvat credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, reconditioning or any other purpose, and it is established from the records, challans or memos or any other document produced by the assessee taking the Cenvat credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer shall pay an amour equivalent to the Cenvat credit attributable to the inputs or capital goods by debiting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured by them, they received components from M/s. Maruti Udyog Ltd. (hereinafter referred to as MUL) on payment of duty under cover of invoice issued under Rule 578, and availed credit of the duty paid and used the components in the manufacture of final products which were cleared to. MUL, and MUL, in turn, took credit of duty paid by Jay Yuhshin on the floor plates etc. Jay Yuhshin did not include the cost of free supply of components in the value of their final product. The demand of duty on goods manufactured and sold by Jay Yuhshin to MUL by inclusion of the value of material supplied free of cost to MUL, was confirmed by the excise authorities on the ground that short levy had occurred due to suppression of the fact of noninclusion of the value of such raw material. On appeal by Jay Yuhshin, the matter was referred to Larger Bench of Tribunal which vide its order reported in 2000 (119) ELT. 718, held that Jay Yuhshin had suppressed the fact of non-inclusion and, therefore, short levy was due to such suppression. The Bench rejected the contention that 'there was no intention to evade payment of duty as the entire duty paid by Jay Yuhshin was available as credit to MUL. Fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the judgment delivered in C.A. No. 176/2000 (M/s. International Auto Ltd. v. Commissioner of Central Excise, Bihar) these appeals must be allowed. The penalty imposed on the appellant is set aside. However, it is recorded that the appellant is not claiming refund of any duty that had been paid by it pursuant to the demand which is set aside by us. 7. In the case of Jay Yuhshin disposed of by the above judgment, the movement of goods supplied free of cost from MUL to Jay Yuhshin was not under Modvat procedure and yet proceedings initiated against Jay Yuhshin to include cost of components so supplied by MUL in the assessable value of the finished product manufactured by Jay Yuhshin and resultant differential duty demand were set aside. The distinction made by the adjudicating authority between the facts of the present case and the apex court's judgment cited supra, namely that the movement of inputs from raw material supplied to job worker was under Modvat Rules in the Jay Yuhshin's case while in the present case, movement of goods purchased by Tecumseh Products India Pvt. Ltd. and supplied to Lawkim Ltd. was not under Modvat Rules, does not exist. The decision in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint to be noted is that whatever duty is paid by the appellant is taken as credit by M/s. WIL. Definitely, there is revenue neutrality and this has a bearing on the question of invoking the longer period, because whatever duty is borne by the appellant will in turn be passed as cenvat credit to M/s. WIL. In these circumstances also, the longer period cannot be invoked. Various other questions have been raised by the appellants regarding invisible loss, etc. We do not think that it is necessary for us to go into the question, especially in view of the revenue neutrality pleaded by the appellant. Therefore, we are not going into the question of the correct quantification on account of invisible losses. 6.7 In view of the above, we allow the appeal with consequential relief. 29. The Hon'ble CESTAT, Bangalore held that value of scrap need not to be included in assessable value of the goods manufactured on job work basis provided landed cost of the raw material is taken for the calculation of the assessable value of goods and the retention of scrap/ waste does not depress the conversion charges. 30. As regarding landed cost of the raw material, there is no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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