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of <h1>Tribunal Identifies True Manufacturer in ENO Fruit Salt Case, Overturns Penalties and Follows Supreme Court's Valuation Guidelines.</h1> <h3>SMITHKLINE BEECHAM ASIA LTD. Versus COMMR. OF C. EX., VISAKHAPATNAM</h3> SMITHKLINE BEECHAM ASIA LTD. Versus COMMR. OF C. EX., VISAKHAPATNAM - 2004 (168) E.L.T. 40 (Tri. - Bang.) Issues Involved:1. Determination of the real manufacturer between M/s. SDP and M/s. SBAL.2. Valuation of goods for the purpose of excise duty.3. Imposition of penalties and interest.Summary:1. Determination of the Real Manufacturer:The primary issue was whether M/s. Southern Drugs and Pharmaceuticals (SDP) or M/s. Smithkline Beecham Asia Ltd. (SBAL) should be considered the real manufacturer of ENO fruit salt. The Commissioner concluded that M/s. SDP was not an independent manufacturer but rather hired labor for SBAL, who provided technical assistance and controlled the production. However, the Tribunal found that M/s. SDP had set up the plant with its own finances, owned the land and machinery, and bore the profit or loss of the venture. Therefore, M/s. SDP was deemed an independent job worker, not hired labor, and thus the real manufacturer.2. Valuation of Goods:The valuation of ENO fruit salt was contested. The Commissioner argued that the assessable value should include various costs and be based on the price charged by SBAL from their dealers. However, the Tribunal held that since M/s. SDP was the manufacturer, the valuation should follow the principles laid down by the Supreme Court in the Ujagar Prints case, which involves the cost of raw materials plus conversion charges and manufacturing profit.3. Imposition of Penalties and Interest:The Commissioner had imposed a demand of Rs. 4,32,19,642/- u/s 11A of the Central Excise Act, along with equivalent penalties u/s 11AC and interest u/s 11AB on M/s. SBAL. Additionally, penalties were imposed on M/s. SBCH and various individuals u/r 209A. The Tribunal, however, set aside these penalties and the demand, as it concluded that M/s. SDP was the actual manufacturer and the valuation method used by them was correct.Conclusion:The Tribunal set aside the Commissioner's order, recognizing M/s. SDP as the real manufacturer and job worker of M/s. SBAL. The valuation of the goods should follow the Supreme Court's guidelines in the Ujagar Prints case. Consequently, all appeals were allowed, and the penalties and demands imposed by the Commissioner were annulled.
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