2024 (5) TMI 6 - AT - Central Excise

Job worker selling HDPE bottles to manufacturer wins excise duty case under Rule 8 valuation dispute

M/s. Sree Mookambikai Polymers Versus Commissioner of GST & Central Excise, Puducherry

The CESTAT Chennai ruled in favor of the appellant in a case involving valuation method for excisable goods. The appellant received goods from principal ... Method of Valuation - Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or cost plus job work charges method to be adopted by them at the time of clearance - receiving goods from principal manufacturer namely M/s. Marico Industries and carrying out job work on the goods - demand alongwith interest and penalty - HELD THAT:- A Coordinate Bench of this Tribunal in M/S. BHAVANI ENTERPRISES, SREE MOOKAMBIKAI POLYMERS, M/S. SMITH ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY AND VICE-VERSA [2018 (2) TMI 139 - CESTAT CHENNAI] has examined an identical matter, wherein they have observed 'it needs to be mentioned that Rule 8 applies when goods are not sold. The goods (HDPE bottles) are sold by appellant to M/s. Marico. The appellant does not captively consume the goods nor does M/s.Marico consume it on behalf of appellant.' The impugned orders are not sustainable and merits to be set aside - Appeal allowed. Issues involved: The appeal challenges the Order in Appeal No. 40/2014 dated 18.2.2014 passed by the Commissioner of Central Excise (Appeals), Chennai regarding valuation of goods under the Central Excise Valuation Rules, 2000.Valuation Methodology Dispute:The appellant received goods from their principal manufacturer for job work and adopted a cost plus job work charges method for valuation. The department contended that Rule 8 of the Valuation Rules should apply instead. The appellant argued that Rule 10A(iii) of the Valuation Rules should govern their case, as Rules 4 to 8 were inapplicable. They relied on the Ujagar Prints case and Rule 10A(iii) for valuation. The Tribunal noted a similar case where Rule 8 was found inapplicable and upheld the valuation method based on cost of raw material plus conversion charges, as per Ujagar Prints case. The Tribunal emphasized that Rule 10A applies when goods are produced by a job worker on behalf of a person, and in this case, Rule 10A(iii) was found to be applicable for valuation.Judgment:The Tribunal observed that Rule 10A(iii) applied to the appellant's case, as it involves goods produced by a job worker for a principal manufacturer. Since Rule 8 was not applicable, the valuation based on cost of raw material plus conversion charges was upheld. The impugned orders were deemed unsustainable, and the appeal was allowed with consequential relief, if any, as per law.