GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI - I
121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034.
GENERAL CIRCULAR NO: 03/2001 DATED:24.1.2001
Sub: CE - Assessable value of goods subjected to
value addition by processes not amounting to
manufacture - Regarding.
Copy of Board's letter F.No.139/08/2000-CX.4 dated 03.1.2001 along with the advice of the Ministry of Law are communicated herewith for information and appropriate action.
Issued from file C.No.IV/16/301/2001-CX.POL.)
Ministry of Law, Justice & CO. Affairs
Department of Legal Affairs
Advice (B) Section
The referring department seeks to be advised whether the Apex Court judgment in the case of Siddharth Tubes Ltd. 2000 (115) ELT 32 SC can be applied for charge of duty on value addition outside the factory of clearance on account of certain processes not amounting to manufacture on manufactured goods in a split / other unit of the same group or by an independent job worker from the original manufacturer of the product if there is no sale to these units / job worker.
2. The referring department's note at pre-page explains the reference. Based on the reference it is observed that one of the positions that may arise is where the goods manufactured in the factory premises are subjected to further process in a shed within factory premises. The other position would be where the goods are manufactured in the factory premises and are subsequently transferred to another unit / job worker outside the factory premises for further process. In the former case, this aspect was considered by the Apex Court in the case of Siddharth Tubes Ltd. Vs Collector of Central Excise, 2000 (115) ELT 32 SC and the Apex Court has held that the mere fact that the process of galvanisation is carried on in another shed can made no difference. The Apex Court further held that when the assessable value is to be calculated of the galvanized black pipe made by the appellants, the element of the cost of galvanization must form part thereof. Thus, it can be seen that the Siddharth Tubes (Supra) case has dealt with a situation where the goods are subjected to further process after manufacture though in a different shed but within the same premises.
3. As regards the other event where the goods have been cleared from the factory premises on payment of duty and have been subjected to further process in a different unit outside the premises of the assessee, such a situation cannot be taken into its fold by the Siddharth Tubes (supra) case. Such a situation would be covered by the case of Union of India Vs J.G.Glass Industries Ltd. 1998 (97) ELT 5 SC wherein both the above situations have been considered by the Apex Court. The Supreme Court in the said case has held that no duty /differential duty is payable again if printing / decoration on the bottles is done in separate premises. The Apex Court further held that duty shall be payable on value of printed bottles if manufacture of bottles and printing thereon is carried out within the same factory because in the latter case, the ultimate product happens to be excisable item at the factory gate which is printed bottle. Thus, it can be seen that in the given situation where the duty paid goods have been subject to further process in a premises other than the factory premises, no further value addition can be made to charge duty. Such a situation as aforesaid, would be covered by J.G.Glass (Supra) case as the ratio therein is the law as laid down by the Apex Court and continues to be so as in the case of Siddharth Tubes J.G.Glass (Supra) case neither has been considered not has till date been overruled by any subsequent Apex Court decision.
4. In view of the above, we advise that the judgement of the Siddarth Tubes ltd. (Supra), does not enable the department to charge duty on value addition outside the factory of clearance on account of certain processes not amounting to manufacture of manufactured goods in a separate / other unit of the same group or by any independent job worker.
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