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TMI Blog2003 (11) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in price is given as discount for the same reason. Therefore, insofar as setting off the proceeds of sale of scrap against cost of manufacture is concerned, we do not see that the position would be any different in the case of a job worker than it would be in the case of a manufacturer making goods of his own account. This is in fact the conclusion of the decision of the Tribunal in Hindustan Engineering [ 2002 (5) TMI 99 - CEGAT, KOLKATA] , although it has been arrived at by a very different process of reasoning. The decision in General Engineering Ltd. v. C.C.E.[ 1999 (1) TMI 337 - CEGAT, NEW DELHI] holding that in a situation identical to the one before us, the selling price of the raw material is not to be deducted in arriving at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Iron and Steel Co. In terms of the agreement with the supplier of the raw material, the appellant sold the waste that arose in its factory during such cold rolling and hardening and retaining with itself the proceeds of the sale. The notice issued to the appellant proposed inclusion in the value for assessment of the steel of the proceeds of sale of the scrap that arose between 1st February 2000 and 31st January 2002. The Additional Commissioner after considering the cause shown and hearing the assessee, confirmed the proposal in the notice and imposed penalty. His order having been confirmed on appeal by the Commissioner (Appeals), the assessee is in appeal before us. 2. The representative of the appellant contends that the price received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f job worker. He contends that in an identical situation, the Tribunal in its two decisions in Jay Engineering Ltd. v. C.C.E. - 1997 (93) E.L.T. 492 and General Engineering Ltd. - 2001 (135) E.L.T. 1149 has held that the value of material retained by a job worker to be additional consideration and so includable in the assessable value of the goods. He further contends that while the prices of the scrap may be a deduction to the supplier raw material, it would not be so in the case of the job worker. To the latter, it is not a deduction because the material did not belong to him. 4. As a matter of general accounting principle, while determining the cost of manufacture of any article, the price obtained by sale of scrap for similar material t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be captively consumed by the manufacturer in the production of other excisable articles is not satisfied. However, we are not able to see why the principles that should govern the determination of the cost of raw material should be different in the case of the job worker and in the case of the person who manufactures the goods on his own account. Both sides were agreed that it is the principles contained in the clarificatory order of the Supreme Court in Ujagar Prints that would apply in the case of manufacture of a job worker. In that order the Court had said that the assessable value of processed fabric would be "deemed to be the price at the factory gate for the processed fabric" and went on to explain that "the factory gate here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s each weighing 500 kg. We will assume no wastage. Now, each of the two quantities of 500 kg. of the co-products could not have been made without utilising 1000 kg. of the raw material. If the departmental representative's arguments were to be accepted. It would follow that the assessable value for each of the two co-products would be Rs. 10,000/- in addition to the manufacturing charges and manufacturing profit, which we will assume in each case to be Rs. 5,000/-. It will then follow that the manufacturing cost would be Rs. 15,000/- x 2 i.e. Rs. 30,000/-. In other words, the cost of manufacture of each product would be Rs. 15,000/- and the total manufacturing cost Rs. 30,000/-. This would result in an absurd situation of the raw material c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e over. It is included once as an additional consideration. The refusal to deduct it as contributing to the reduction of the raw material cost would result in it being once again included. That the reported decision does not indicate that this point was raised before the Tribunal which obviously then could not have considered it. The same position applies with regard to Jay Engineering Works. This decision proceeds merely on the basis that the price of the scrap retained by the job worker constitute additional consideration by him without considering if we may say so, the other end of the transaction, the valuation of the raw material. Both these decisions have to be distinguished. 8. The appeal is accordingly allowed and the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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