TaxTMI 
TaxTMI 
2011 (9) TMI 776
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.... Rules, 2000, effective from 1-4-2007 will apply to this case and the appellant should have discharged the duty liability as a job worker on the basis of 110% of cost of production as per Rule 8 read with sub-rule (iii) of Rule 10(a) of the Valuation Rules, as the principal who had received the hallow profiles, had captively consumed the same and there was no sale. Coming to such a conclusion, show cause notice was issued for demand of differential duty payable by the assessee. The adjudicating authority confirmed the differential duty demand along with interest and also imposed equivalent penalty and penalty on the individual. Aggrieved by such orders, appellants preferred an appeal before the learned Commissioner (Appeals). Learned Commissioner (Appeals) did not agree with the contentions raised by the appellant and upheld the Orders-in-Original. Hence these appeals. 3. Learned advocate appearing on behalf of the appellant would take us through the Orders-in-Appeal, show cause notice and the adjudicating authority's order. It is his submission that the appellant company herein is a job worker and does fabrication/job work on raw material supplied by the customer as per th....
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....e case of Advance Surfactants India Ltd. (supra) came up before the coordinate Bench of the Tribunal in Bangalore, wherein I was one of the Member and the Bench took the following view. "7. On these factual matrix we need to appreciate the provisions under Rule 10A, which is reproduced herein under : "RULE 10A. Where the excisable goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then,- (i) in a case 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 jo....
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....isions of Rule 8 will apply. In order to understand the Revenue's case, we reproduce the provisions of Rule 8. "RULE 8. 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 values shall be [one hundred and ten per cent of the cost of production or manufacture of such goods." 7.2. It can be seen from the above reproduced Rule that this will come into play only when the goods are used for consumption by the assessee or on his behalf, in the production or manufacture of other articles, in such a case the value shall 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....
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....r on behalf of an assessee. Since the said clarification is against the mandate of the said Rule 8 of Central Excise Valuation (Determination of Prices of Excisable Goods). Rules, the said clarification is untenable and has to be held as such. 9. We find that our above view has been confirmed by the Bench in the Tara Industries Ltd-case (supra). We may reproduce the said ratio. "2. The appellants manufacture 'wool Tops, on job work basis out of raw wool 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 I 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 sha....
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..... Under the new valuation provisions, introduced with effect from 1-7-2000, there is no departure from the principles laid down by the Apex Court in the above two decisions, in respect of goods manufactured on job work basis. In other words goods manufactured on job work basis after 1-7-2000 will continue to be valued in the same manner as they were being valued before 1-7-2000. In other words, after 1-7-2000, in respect of goods manufactured on job work basis, valuation would be governed by Rule 11 of the new Valuation Rules of 2000 read with Rule 6 read with the above two decisions of the Apex Court." 3. It is clear from the above two paras of the Circular that goods produced 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.) = (2002-TIOL-03-SC-CX.)] 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 ....
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....s they may not apply in a situation- like in this case provisions of Rule 11 will apply and Revenue has to take the recourse to provisions of Rule 11 which talks about using reasonable means consistent with the principles and general provisions of these rules read with sub-section (1) of Section 4 of Central Excise Act, 1944. Keeping this in mind, we find that the ratio laid down by the Hon'ble Supreme Court in the case of Ujagar Prints and followed by various other decisions of this Tribunal and accepted by Revenue in their various Circulars will squarely apply i.e. to ascertain the assessable value on the cost of materials plus processing charges. In our view, the appellants have been correctly valuating their products by adopting this method. 12. We find that the judgment relied upon by the learned SDR of this Bench in the case of Ultrapack is on a different set of facts i.e. in that case, the 'Ultramarine blue' was sent in bulk form by M/s. Reckitt Benckiser India Ltd. and the said product was repacked by the assessee, for Reckitt Benckiser India Ltd. and hence it was held that Rule 8 will be applicable. It can be seen that in that case, Rule 8 was invoked because it wa....