AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (3) TMI 1380
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....s for disposal. 2. The relevant fact that arise for consideration are the appellants herein were manufacturing on job work basis chemicals for M/s. Hindustan Unilever Ltd. (HUL for short). The appellants herein used to receive Linear Alkyl Benzene (LAB for short) from M/s. HUL. The appellants used to manufacture Linear Alkyl Benzene Sulphuric Acid (LABSA for short) in their factory and send the same back to M/s. HUL. M/s. HUL consume the said LABSA in their factory for the manufacture of Soaps and Detergents. The appellant herein were discharging the Central Excise Duty on LABSA manufactured by them, based on cost of manufacturing which included cost of raw materials, processing charges and profit margin. It is also on record that M/s. HUL was supplying the LAB and the appellants were consuming other chemicals for the manufacturing of LABSA. The Central Excise authorities were of the view that the appellant being a job worker, w.e.f. 1-4-2007, by virtue of Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, were required to value the goods cleared by them to M/s. HUL under the said rule. Coming to such a conclusion, show-cause notices ....
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....nt. It is his submission that provisions of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 will also not apply as the goods, which are cleared by the appellant, are consumed by M/s. HUL for the manufacture of their final products. He would submit that Rule 8 will apply only when the excisable goods are consumed by himself or on his behalf for production or manufacture of other articles. He would also draw our attention to the Circular issued by the Central Board of Excise & Customs vide No. 902/22/2009-CX., dated 20th October 2009 in respect of clarification of assessable value in an identical situation. He would submit that the said explanation is discussing about a situation where the goods, after being job worked, are cleared to depot, consignment agent or to the purchaser directly. He would submit that the judgment of this Tribunal in the case of Tara Industries Ltd. v. CCE, Chandigarh [2003 (161) E.L.T. 758 (Tri.-Del.)] and in the case of Mahindra Ugine Steel Co. Ltd. v. CCE, Pune-I [2003 (156) E.L.T. 618 (Tri. - Mumbai)] will be applicable in this case. He would also submit that the C.B.E.C., on 31-3-2010, issued another clarifi....
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....ase where the goods are sold by the principal manufacturer for delivery at the time of removal of goods from the factory of job-worker, where the principal manufacturer and the buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the transaction value of the said goods sold by the principal manufacturer; (ii) in a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of the job-worker, but are transferred to some other place from where the said goods are to be sold after their clearance from the factory of job-worker and where the principal manufacturer and buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of said goods from the factory of job-worker; (iii) in a case not covered under clause (i) or (ii), the provisions of foregoing rules, wherever applicable, shall m....
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....hall be 110% of the cost of production or manufacture of such goods. If this rule needs to be applied in the case, then it is to be on record that LABSA is a product of the appellant herein and is consumed by HUL on appellant's behalf or the said products are consumed by some other job worker of the appellant, in his factory for further manufacturing of goods. In the absence of any such situation, we are of the view that provisions of Rule 8 will not come into play. As already reproduced herein above, it is undisputed that LABSA is manufactured by job worker and cleared to HUL for further consumption and the said LABSA is the intermediate product required by HUL which is manufactured or produced by the appellant as a job worker. The key words in Rule 8 that needs to be interpreted are 'consumption by an assessee or on his behalf' for applying the said Rule for arriving at valuation or determination of goods. In the case in hand, it is very clear and not disputed that the appellant is not consuming the said LABSA nor is it consumed on his behalf by HUL. In our considered view, the provisions of Rule 8 will not get attracted in this case. 8. At this juncture, we find that a clarific....
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....ol received from parties for whom the job work is undertaken. They worked out the assessable value (for Central Excise purposes) of wool tops as the aggregate of the cost of raw material and their job work charges and paid duty on the basis of such assessable value. Under the impugned order, differential duty has been demanded on the basis that the goods should have been valued under Rule 8 of the Central Excise Valuation Rules, 2000 which came into force w.e.f. 1-7-2000. We read that Rule : "Rule 8. Where the excisable goods are not sold by the assessee but are used for consumption or on his behalf in the production or manufacture of other articles, the value shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods". A perusal of the above Rule makes it clear that it relates to valuation of "excisable goods not sold by the assessee but are used for consumption or on his behalf in the production or manufacture of other articles". This is clearly not the case here. The goods are not being captively consumed by the assessee himself or on his behalf by somebody else. There could be no argument that this rule has any relevane to the present c....
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....on job work basis are required to be valued according to the rule laid down by the Apex Court's judgment in the case of Ujagar Prints Ltd. [1989 (39) E.L.T. 493 (S.C.)] even after 1-7-2000. The original valuation and payment of duty took place according to the principle of valuation approved by the Apex Court. The impugned orders are contrary to the specific provisions of valuation rules as well as clarification issued by the Central Board of Excise and Customs. They are required to be set aside. We do so and allow the appeals. In view of our disposing of the appeals themselves, stay petitions do not survive." 10. In yet another case, this Tribunal has very clearly held that provisions of Rule 8 not applicable to a situation of job worker. The said ratio of the judgment is reproduced as under :- "4. Rule 8 of the Valuation Rules reads "Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods." For the provision of this rule to apply, therefore, two requirements are to be f....