2012 (7) TMI 113 - AT - Central Excise

Appellate Tribunal Upholds Central Excise Duty Assessment on Job Work Goods

The Appellate Tribunal CESTAT, Ahmedabad rejected the appeal filed by the Revenue, affirming the decision of the first appellate authority. The Tribunal ... Valuation - job work - inclusion of job work charges in the value – Held that:- in case value of comparable goods is known, the same can be adopted for goods manufactured by the job worker. - goods were cleared on the price of M/s Reliance Industries Ltd., so the price of comparable goods are known and when value of polyester textured yarn of M/s Reliance Industries Ltd. was known the alternative of cost construction is barred and cannot be resorted to - duty has correctly been paid as determined on the basis of the value of comparable goods. - amount towards job work charges not required to be included - decided in favor of assessee. Issues involved:1. Assessment of central excise duty on goods manufactured on job work basis.2. Determination of assessable value based on cost construction method or comparable goods.3. Interpretation of Circular No.24/14/93 for valuation of goods manufactured on job work basis.4. Consideration of previous judgments and the principle of res judicata in the assessment process.Detailed Analysis:1. The appeal before the Appellate Tribunal CESTAT, Ahmedabad was filed by the Revenue against an order in appeal related to the assessment of central excise duty on goods manufactured on a job work basis. The respondent was engaged in manufacturing textured yarn under Chapter 54 of the Central Excise Tariff Act, 1985, receiving raw material from a principal manufacturer and returning the finished product after job work. The issue arose when the authorities found discrepancies in the assessable value of the goods due to the exclusion of job charges by the respondent.2. The main issue revolved around determining the assessable value based on the cost construction method or comparable goods. The Revenue argued that the value should be based on the cost of production or manufacture, citing Rule 6(b)(ii) of the Central Excise Valuation Rules. They contended that the respondent should have considered the raw material cost plus job charges as per the law established by the Apex Court. The respondent, on the other hand, argued that the assessable value declared by them was higher than the value declared by the principal manufacturer for the final product.3. The Tribunal analyzed Circular No.24/14/93, which provides guidelines for the valuation of goods manufactured on job work basis. The Circular clarifies that the assessable value should be determined under Rule 7 of the Valuation Rules, 1975, either based on comparable goods or the cost construction method. In cases where the value of comparable goods is known, it should be adopted for valuation. The Tribunal upheld the first appellate authority's decision, emphasizing that in this specific case, the goods were cleared based on the price set by the principal manufacturer, making the value of comparable goods known and thus justifying the duty paid by the respondent.4. Furthermore, the Tribunal considered previous judgments, including one by Commissioner (Appeals), which had not been challenged, supporting the interpretation of the law applied in this case. The principle of res judicata was invoked, stating that once a judgment becomes final and is brought to the knowledge of the lower authority, they cannot take an adverse view. The Tribunal concluded that the impugned order was legally sound, as the respondent had correctly discharged their duty liability based on the value of the goods cleared by the principal manufacturer.In conclusion, the Appellate Tribunal CESTAT, Ahmedabad rejected the appeal, affirming the decision of the first appellate authority regarding the assessment of central excise duty on goods manufactured on a job work basis.