1999 (10) TMI 244 - AT - Central Excise

Appellant's Agent Status Confirmed: Agreement Terms & Control Key

BEE PEE COATING LTD. Versus COLLECTOR OF C. EX., VADODARA

BEE PEE COATING LTD. Versus COLLECTOR OF C. EX., VADODARA - 2000 (115) E.L.T. 765 (Tribunal) Issues:1. Assessment of assessable value based on wholesale prices.2. Dispute regarding deductions in assessable value.3. Claim for assessable value based on raw materials, manufacturing expenses, and profit.4. Interpretation of the agreement between the appellant and Berger Paints.5. Determination of the relationship between the appellant and Berger Paints.6. Applicability of legal precedents in assessing the relationship between parties.7. Claim for deductions permissible under previous tribunal orders.Analysis:Issue 1: Assessment of assessable value based on wholesale pricesThe appellant, a subsidiary of Berger Paints, manufactured paints for Berger Paints, with duty paid based on wholesale prices. Disputes arose regarding deductions from the sale price for assessable value. Previous tribunal orders settled the issue of deductions, which became final as no appeal was filed before the Supreme Court.Issue 2: Dispute regarding deductions in assessable valueThe appellant claimed assessable value based on raw materials, manufacturing expenses, and profit, citing a Supreme Court judgment. However, the jurisdictional authorities rejected this claim, holding the appellant as an agent of Berger Paints, not an independent manufacturer. The dispute centered on the valuation methodology post-1st April 1993.Issue 3: Claim for assessable value based on raw materials, manufacturing expenses, and profitThe appellant's claim for assessable value calculation based on raw materials and job charges, akin to the Ujagar Prints case, was rejected by the authorities. They emphasized the agreement terms, indicating the appellant's role as an agent of Berger Paints, not an independent manufacturer.Issue 4: Interpretation of the agreement between the appellant and Berger PaintsThe agreement clauses highlighted the appellant's role in manufacturing paints solely for Berger Paints, with all materials and specifications supplied by Berger Paints. The agreement outlined strict quality control, supervision, and return of goods to Berger Paints, indicating a close relationship between the parties.Issue 5: Determination of the relationship between the appellant and Berger PaintsAuthorities concluded that the appellant was an agent of Berger Paints due to the close supervision, control, and dependency on Berger Paints for manufacturing activities. The appellant lacked independence in machinery, capital, and decision-making, functioning as an extended arm of Berger Paints.Issue 6: Applicability of legal precedents in assessing the relationship between partiesThe authorities relied on legal precedents like the Pawan Biscuits case to establish that the appellant's relationship with Berger Paints was that of an agent, not an independent manufacturer. The Tribunal rejected the appellant's argument that their case aligned with the Ujagar Prints decision, emphasizing the control and dependency factors.Issue 7: Claim for deductions permissible under previous tribunal ordersThe appellant sought deductions permissible as per previous tribunal orders, which the Tribunal accepted. The Tribunal ordered that the appellant be allowed deductions as held permissible in previous orders, settling the valuation issue between the Revenue and the appellant.In conclusion, the Tribunal upheld the lower authorities' decision, determining the appellant as an agent of Berger Paints, not an independent manufacturer, based on the agreement terms and control exercised by Berger Paints. The appellant's claims for assessable value calculation and applicability of legal precedents were rejected, except for the deductions permissible under previous tribunal orders.