CESTAT rules in favor of job-workers, treating goods as intermediate products, not finished goods.

The Appellate Tribunal CESTAT, Mumbai, ruled in favor of the applicants, job-workers in a dispute over the assessable value of job-worked goods. The Tribunal considered the goods as intermediate products, not finished goods, based on the Supreme Court's decision in a similar case. Consequently, the Tribunal waived the duty, interest, and penalty amounting to Rs.23,52,821, and stayed the recovery during the appeals' pendency.

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Issues:
1. Whether the value of materials supplied by the principal should be included in the assessable value of job-worked goods.
2. Whether the goods cleared by the applicants are intermediate products or finished and marketable goods.

Analysis:

The judgment by the Appellate Tribunal CESTAT, Mumbai, involved a common issue in two appeals regarding the waiver of duty, interest, and penalty amounting to Rs.23,52,821. The applicants, functioning as job-workers, received machine bodies for Rubber Bonding from their principal. The dispute arose as the Revenue contended that the value of the machine bodies supplied by the principal should be added to the assessable value of the job-worked goods. On the other hand, the applicants argued that the goods they cleared were intermediate products, not finished goods, and relied on the decision of the Hon'ble Supreme Court in the case of International Auto Ltd. The Revenue cited the decision in the case of Ujjagar Prints Ltd., emphasizing that the materials supplied by the principal should be considered in determining the assessable value.

The Tribunal noted the Supreme Court's ruling in the International Auto Ltd. case, stating that a job-worker is liable to pay duty based on inputs purchased and labor charges when manufacturing assemblies used in further manufacturing processes. Considering this, the Tribunal found that the applicants presented a strong case for a complete waiver of the pre-deposit. Consequently, the Tribunal waived the pre-deposit of the dues adjudged in the impugned order and stayed the recovery during the pendency of the appeals. The judgment was dictated and pronounced in open court by the Tribunal.

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