Tribunal rules FHS & Heinz not related, values Glucon-D for excise duty per Ujagar Prints

The Tribunal determined that FHS and Heinz were not related persons, leading to the valuation of Glucon-D for excise duty purposes based on the cost of raw material, packing material, job charges, and profit in accordance with the Ujagar Prints judgment. Consequently, the impugned order was set aside, and the appeals were allowed.

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Issues Involved:
1. Valuation of Glucon-D for excise duty purposes.
2. Determination of whether FHS and Heinz are related persons.
3. Applicability of the Apex Court's judgment in the case of Ujagar Prints vs. Union of India.
4. Applicability of the Apex Court's judgment in the case of S. Kumars vs. Commissioner of Central Excise.

Issue-wise Detailed Analysis:

1. Valuation of Glucon-D for Excise Duty Purposes:
The primary issue was the valuation of Glucon-D blended and packed by FHS for Heinz. The period of dispute was from October 2000 to February 2002. Initially, FHS paid duty based on Heinz's sale price from their depots. From October 2000, FHS started paying duty based on the cost of raw material, packing material, job charges, and profit, following the Apex Court's judgment in Ujagar Prints vs. Union of India. The Department contended that the transactions were not on a principal-to-principal basis, suggesting that the assessable value should be the sale price at which Heinz sold the goods.

2. Determination of Whether FHS and Heinz are Related Persons:
The Tribunal examined whether FHS and Heinz were related persons as defined under section 4(3)(b) of the Central Excise Act, 1944. The Department argued that the terms of the agreement between FHS and Heinz indicated excessive control by Heinz over FHS, suggesting a relationship beyond principal-to-principal. The Tribunal analyzed various clauses of the agreement, including the provision of technical know-how, manufacturing schedule, quality control, and financial independence. It was concluded that the conditions in the agreement did not curtail the financial independence of FHS, and there was no evidence of mutual financial interest or control.

3. Applicability of the Apex Court's Judgment in the Case of Ujagar Prints vs. Union of India:
The Tribunal held that since FHS and Heinz were not related persons, the valuation of the goods should be determined as per the Apex Court's judgment in Ujagar Prints vs. Union of India. This involves aggregating the cost of raw material, packing material, job charges, and job worker's profit.

4. Applicability of the Apex Court's Judgment in the Case of S. Kumars vs. Commissioner of Central Excise:
The Apex Court in S. Kumars vs. Commissioner of Central Excise held that if the job worker and principal manufacturer are related persons, the valuation should follow section 4(1)(b) of the Act read with the relevant valuation rules. However, since the Tribunal found that FHS and Heinz were not related persons, the judgment in S. Kumars was deemed inapplicable.

Conclusion:
The Tribunal concluded that FHS and Heinz were not related persons. Therefore, the assessable value of the goods should be determined based on the cost of raw material, packing material, job charges, and profit, as per the Ujagar Prints judgment. The impugned order was set aside, and the appeals were allowed.

Pronouncement:
The judgment was dictated and pronounced in the open court.

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