TaxTMI 
TaxTMI 
1993 (3) TMI 317
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....anufactured under an agreement for and on behalf of M/s. Hindustan Petroleum Corporation Limited (HPCL) from the steel sheets/coils supplied by them. The assessable value of these steel drums were determined on the basis of the declared cost of the steel sheets and the appellants' fabrication charges, as per Chartered Accountant's certificates, filed from time to time. HPCL used these drums for packing of their asphalt bitumen. 3. A Show Cause Notice was issued to the party asking them to show cause as to why the assessable value of the steel drums manufactured by them for HPCL should not be revised after adding HPCL's notional profit margin of 10%. The Show Cause Notice was also issued as to why the transportation charges and the cost of wrapping material should also not be added to the cost as per Chartered Accountant's Certificate. Transportation charges were incurred on account of transport of steel sheets from railway siding to the factory of the appellants, and were borne by the appellants. The wrapping material was received by the appellants along with the steel sheets/sheet coils, and no separate cost of these wrapping materials was shown, and its cost was already i....
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.... 1989 (39) E.L.T. 493 (S.C.) Para 2; (2) J.B. Kharwar Sons v. Union of India, 1992 (61) E.L.T. 58 (Guj.); (3) Kwality Silk Mills v. Union of India, 1992 (61) E.L.T. 242 (Guj.); (4) Collector of Central Excise, Vadodara v. N.J. Metal Screens Manufacturing Company Ltd., 1991 (37) ECR 655 (CEGAT). 9. The learned Advocate also referred to the Tribunal decision in Appeal Nos. 17/79-A and 58/80-A, dated 14-9-1985 relating to Standard Drum and Barrel Manufacturing Company, Bombay v. Collector, Central Excise, Bombay, in which a similar question has been decided, by the Tribunal. 10. Smt. C.G. Lal, learned SDR, mentioned that there was no statutory fixation of price and that 10% profit was reasonable. She referred to the following citations in support of her arguments :- (1) Union of India v. Bombay Tyre International - 1983 (14) E.L.T. 1896 (S.C.) Para 33; (2) Food Specialities Ltd. v. Appellate Collector, Central Excise and Customs, New Delhi - 1988 (33) E.L.T. 331 (P & H); (3) Pawan Biscuit Company Pvt. Ltd. v. ....
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.... the Central Excise (Valuation) Rules, 1975, it has been provided that if the value of excisable goods cannot be determined under any of the Rules of those Central Excise (Valuation) Rules then the proper officer shall determine the value of such goods according to the best of his judgment, and for this purpose, he may have regard, among other things, to any one or more of the methods provided for in those rules. 16. The appellants were having a Central Excise L4 Licence No. 87/Metal/70. The steel drums were manufactured by them out of steel coils supplied to them by their customer-HPCL. Such steel drums were used by HPCL for packing of their product-asphalt bitumen. These drums were not sold as such by the HPCL. As the steel sheets/coils were supplied free of cost by HPCL, under an agreement, fabrication charges were paid by HPCL to the appellants. The steel sheets/coils were lifted by the appellants from the railway siding and transported to their factory. These transportation charges were not billed separately by the appellants to HPCL, but these charges were included in their fabrication charges payable by HPCL to the appellants, as per agreement. The steel sheets/coils....
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.... there are no comparable goods produced or manufactured by the assessee or any other assessee, then the value is to be determined on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods. 25. There is no reference to the customer's profit. The reference is only to the manufacturer's profit. 26. Only for this limited purpose such supply of steel drums to HPCL, the customers, could be considered as a 'deemed sale' as observed by the Hon'ble Supreme Court in the case of Ujagar Prints v. Union of India - 1989 (39) E.L.T. 493 (S.C.). In the context of processing of fabrics on job work basis for the customers (traders) by the processors the Hon'ble Supreme Court observed that 'the assessable value of the processed fabric would be the value of the grey cloth in the hands of the processor plus the value of the job work done plus manufacturing profit and manufacturing expenses whatever these may be, which will either be included in the price at the factory gate or deemed to be the price at the factory gate for the processed fabrics. The factory gate here means the "deemed" factory gate as if t....
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....7) E.L.T. 501 (S.C.) = 1992 AIR S.C.W. 2020, the Hon'ble Supreme Court has observed (in a case where Texmaco pursuant to contracts entered into in this behalf with the railway administration, fabricated and delivered to the railways, wagon bodies mounted on wheel sets supplied by the railways) that consideration of ownership of the goods were extraneous to levy of duties of excise which are imposts on manufacture. 33. In the cases (1) Collector, Central Excise, Madras v. Modoplast (P) Ltd., Coimbatore, 1985 (21) E.L.T. 187 (Tribunal); and (2) Metal Box India Ltd., Calcutta v. Collector, Central Excise, Calcutta, 1986 (23) E.L.T. 187 (Tribunal), the Tribunal held that the goods manufactured out of customer's raw materials cannot be said to have been manufactured on behalf of the customer when the licence for manufacture was taken by actual manufacturer and other statutory requirements for manufacture were complied with by actual manufacturer, when dealings are on principal to principal basis and manufacturing unit was not a nominee or facade for supplier of raw material. 34. In the case of B.S. Rajasekhar v. Collector, Central Excise, 1993 (63) E.L.T. 369 (Tribunal),....
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....of the goods processed on job work basis by the job worker. The Tribunal held that in view of the judgment of the Supreme Court in the case of Ujagar Prints reported in 1989 (39) E.L.T. 493 (S.C.), customers profit on notional basis was not includible to the assessable value of the goods processed by the respondents. 39. Smt. C.G. Lal, the learned SDR, had referred to the observations of the Hon'ble Supreme Court in the case Union of India v. Bombay Tyre International, 1983 (14) E.L.T. 1896 (S.C.), that it was not possible to conceive of the price under Section 4(1)(a) being confined to the manufacturing cost and the manufacturing profit and that it was not possible to limit the price to its components representing the manufacturing cost and manufacturing profit 40. In the case before us the assessments were for the period 1-10-1978 to 31-3-1979 and were done on the basis of the Chartered Accountant's certificate dated 27-7-1979 under the provisions of Rule 9B of the Rules. The assessable values were arrived at under the Valuation Rules, 1975. The differential duty demanded on the basis of Chartered Accountant's certificate dated 20-2-1980 for the subsequent period ....
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...., strictly in accordance with the processing details, formulae, recipe and packing specifications provided by M/s. Britannia Industries Ltd. (BIL). M/s. BIL supplied at its own cost to the Pawan Biscuit Company, the biscuit cutters, moulders, ingredients and packing material required for the manufacture of their brands of biscuits. BIL exercised quality control and supervised the manufacture of biscuits by Pawan Biscuit Company. The biscuits were sold in the wholesale market by the BIL. From the circumstances of that case, the Tribunal had come to a finding that the relationship between the Pawan Biscuit Company and BIL was that of Agent and Principal. They had held that the normal price under Section 4(1)(a) of the Act was not ascertainable on the facts of the case and that the assessable value should be determined on the basis of the comparable sale namely the price at which the BIL were selling the biscuits in the wholesale market. 45. In the case before us, the steel drums were used by HPCL for packing asphalt bitumen. These drums were not sold as such by the customer (HPCL). There is no finding that the appellants before us were Agents of HPCL in the sense in the case ....