1999 (3) TMI 437 - AT - Central Excise

Tribunal Ruling on Duty Liabilities & Penalties for Manufacturers and Job Workers

SWEET CONFECTIONERY Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-II

SWEET CONFECTIONERY Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-II - 2002 (146) E.L.T. 405 (Tri. - Mumbai) Issues: Valuation of goods manufactured by a job worker, applicability of Supreme Court judgment, liability to duty, penalty imposition, confiscation of plant & machinery, applicability of Sec. 11AC, determination of duty liability, interest demandability.Valuation of Goods Manufactured by a Job Worker:The case involved M/s. Sweet Confectionery (SC) acting as a job worker for M/s. Parrys Confectionery (Parrys). The issue was the determination of the value of goods manufactured by SC for Parrys. The department alleged that SC received amounts over and above the declared assessable value before 1-3-94. The notice excluded certain rules for valuation and adopted the assessable value declared by Parrys at its own plant. The Commissioner confirmed the duty demand and imposed penalties based on this valuation. However, the Commissioner's decision ignored the Supreme Court judgment in Ujjagar Prints v. Union of India, which stated that the value of goods manufactured by a job worker should include the value of raw material, job work done, and the profit of the manufacturer.Applicability of Supreme Court Judgment:The departmental representative failed to justify why the Supreme Court judgment in Ujjagar Prints should not be applied in this case. The Tribunal emphasized the importance of following established legal precedents in determining the value of goods manufactured by a job worker.Liability to Duty and Penalty Imposition:The Tribunal found that SC did not dispute the duty liability for the period before 1-3-94. The duty for this period was confirmed at Rs. 38,595. However, the penalty imposed on SC was set aside as the contravention occurred before the enactment of Sec. 11AC in September 1996. The relationship between SC and Parrys was clarified as that of buyer and seller, leading to the discharge of duty liability by SC and not Parrys.Confiscation of Plant & Machinery and Interest Demandability:The Tribunal did not find sufficient grounds to confirm the confiscation of plant & machinery or the imposition of interest. The confiscation was based on the incorrect determination of duty liability, and interest was deemed not demandable under the provisions of Sec. 11AB.Conclusion:The Tribunal partially allowed Appeal No. E/3151 and fully allowed Appeal No. E/3185, with consequential relief to follow. The judgment highlighted the importance of correctly applying legal precedents in determining duty liabilities and penalties in cases involving job workers and manufacturers.