2018 (2) TMI 1004 - AT - Central Excise

Tribunal sets aside demand, rules on valuation method for job work goods

Unique Pharmaceutical Laboratories Versus Commissioner of Central Excise, Mumbai-III

The Tribunal ruled in favor of the appellant, setting aside the confirmation of demand of duty, interest, and penalty. The Tribunal determined that the ... Valuation - includibility - quantity discount - Held that: - the appellants are manufacturing the said goods on job work basis. In these circumstances, the valuation is to be arrived at on the basis of the decision of the Hon,ble Apex Court in the case of Ujagar Prints [1988 (11) TMI 106 - SUPREME COURT OF INDIA] - reliance placed in the case of Atul Painters [2005 (8) TMI 414 - CESTAT, MUMBAI], where it was held that Revenue should bring out the fact of grant of the discount led to lowering the assessable value than as per the Ujjagar Prints formula - appeal allowed - decided in favor of appellant. Issues:Confirmation of demand of duty, interest, and penalty based on valuation method for goods manufactured on job work basis; Whether demand show-cause notice barred by limitation.Analysis:The appeal was filed against the confirmation of demand of duty, interest, and penalty by M/s. Unique Pharmaceutical Laboratories. The appellant contended that they were manufacturing goods on behalf of the loan licensee on a job work basis and were claiming quantity discount while paying excise duty. The valuation method adopted by the appellants was based on the sale price at the depot of the loan licensee, deducting the quantity discounts to pay duty on the remaining amount. The appellant argued that the revenue should consider it a job work situation and determine the assessable value based on the decision of the Hon'ble Apex Court in the case of Ujagar Prints. Additionally, it was claimed that the demand show-cause notice was barred by limitation.The Tribunal reviewed the records and acknowledged that the appellants were indeed manufacturing goods on a job work basis. In line with the decision of the Hon'ble Apex Court in the case of Ujagar Prints, the valuation method should be determined accordingly. Referring to a previous case, the Tribunal emphasized that if the assessable value, calculated as per the Ujagar Prints formula, was not less than the trader's selling price on which duty was discharged, then the assessable value and duty paid could not be challenged by the revenue. The Tribunal found no justification to delve into the eligibility for various discounts or case laws cited when the costing formula from the Ujagar Prints decision had not been violated, and no evidence of duty being underpaid was presented.Ultimately, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order. The decision was based on the fact that the revenue did not demonstrate how the grant of discount led to a lower assessable value than the Ujagar Prints formula. By following the precedent set in similar circumstances, the Tribunal concluded the appeal in favor of the appellant. The judgment was pronounced in court on 29/12/2017.