TaxTMI 
TaxTMI 
2014 (4) TMI 720
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.... on an intelligence received, the officers of Central Excise Department visited the premises of SGSPL and undertook an investigation. During the investigation, it appeared to the officers that SGSPL had undervalued in respect of the goods which are manufactured for M/s Atlantic Lubricants & Sp. Pvt.Ltd and M/s Petronas Marketing (India) Pvt.Ltd (hereinafter referred to as 'Atlantic' and 'Petronas'). After recording various statements of the employees of the SGSPL, show cause notice was issued directing SGSPL as to why the demand of differential duty be not raised on them, as the value which is considered for discharge of Central Excise duty was under-valued, interest be not demanded and penalties be not imposed. SGSPL and other appellants contested the show cause notice on various grounds mainly on the ground that the agreement between Atlantic and Petron as was on principle to principle basis and the input required for manufacturing of final product were purchased by them and the machinery and the labour was their own, hence transaction value is the correct value on which Excise duty is correctly discharged. The adjudicating authority, after following the due process of law, did n....
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.... Highway, Andheri (East), Mumbai [old address 311-312, 3rd Floor, Ascott Center, Sahar Road, Andheri (East), Mumbai] under Rule 25(1) of Central Excise Rules, 2002 read with Section 11AC [Now Section 11AC(1)(a)] of the Central Excise Act, 1944. x) I impose personal penalty off Rs.5,00,000/- (Rupees Five Lakhs only) on Shri Mahendra Pratap Singh, C.E.O. of M/s Petronas Marketing (India) Pvt.Ltd. , 204-205, 2nd Floor, 349 Business Point, Western Highway, Andheri (East), Mumbai [old address 311-312, 3rd Floor, Ascott Center, Sahar Road, Andheri (East), Mumbai] under Rule 26 of Central Excise Rules, 2002. 3. Aggrieved by such an order, the appellants are before us. 4. Shri Prakash Shah, ld.Advocate appeared for all the appellants and Shri S.K. Mall, Addl. Commissioner (A.R.) appeared for the Revenue. 5. Ld. Counsel for the appellant would submit that the findings recorded by the adjudicating authority are incorrect. It is his submission that the appellants are not manufacturing goods on behalf of the Petronas or Atlantic and are procuring all the required raw materials including packing material on their own, they have their own plant and mach....
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....A of Central Excise Valuation Rules, 2000, he would submit that the said rule envisages the manufacture of the goods on behalf of the raw material supplier. He would submit that in the case in hand, none of the raw material is supplied by Atlantic or Petronas but are procured by SGSPL from their own funds. He would also submit that the expression 'on behalf of' would apply when only three parties are involved which not the case in this appeal. It is his submission that the reliance placed by the adjudicating authority on the oral evidence of various persons to confirm the demand, cannot be relied upon in view of the written agreement as the said written evidence prevail over any other oral evidences. He would submit that there are various tariff and non-tariff notifications issued by CBEC to clarify the term 'by and on behalf of' and would submit that the Board itself is very clear as to what the term 'by or on behalf of' intended. It is also his submission that the case is now decided by Apex Court in the case of Prestige Engg. (India) Ltd - 1997 (73) ELT 497 (SC). It is also his submission that the adjudicating authority has not considered any of the submissions made by them in i....
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....Atlantic and Petronas as the case may be, the product code in form of blending chip were sent to SGSPL and were directed to procure the additives from the said suppliers only; no raw material supplier would supply the material without authorization of Petronas or Atlantic as the case may be and the price of raw material and packing material was sent to SGSPL for costing of the product; prices of raw material were negotiated by Atlantic or Petronas as the case may be and SGSPL cannot endorse their name on the pack of lubricants, while the Atlantic is mentioned as manufacturer and marketeer. After taking us through the various statements recorded by the Revenue and e-mail correspondences between the Atlantic and the raw material supplier, he would submit that the entire activity of the supplier of the raw material from the vendor was controlled by Atlantic or Petronas as the case may be; SGSPL were not even aware about the specifications of raw material for which they were issued purchase orders; in case of stickers, labels, packing materials etc., the Atlantic or Petronas supplied the vendors with moulds, casts and designs, based on which only such packing materials are produced and....
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.... the goods manufactured by them is correct or the Revenue is correct by demanding the duty on the value of the goods based upon the sale price of the goods in the market and to hold whether SGSPL is a job worker under the provisions of Rule 10A of Central Excise Valuation Rules, 2000 or otherwise. 9. The undisputed facts are that the appellant is manufacturing the products for Atlantic and Petronas as per the agreement entered by them. The agreement entered by the appellant with Atlantic is of April 2004 while the agreement entered with Petronas is of September 2008. On perusal of the agreement, it is undisputed that the appellant is carrying out the manufacturing activity of the final product and sells them to Petronas or Atlantic at a value/price which is mutually agreed. It is also undisputed that the finished goods cleared from SGSPL are on an invoice on which VAT is discharged by the appellant. It is also undisputed that the product manufactured by the appellant are as per the specification of the finished goods as has been given by Petronas or Atlantic. 10. The adjudicating authority, in the impugned order, while holding against the appellant has recorded the reasoning ....
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....s and circumstances of the case. m) All the negotiations regarding supply, price, and availability of raw material and packing materials were being carried out by the principal manufacturers and that such supply could not take place without direct interference of M/s Atlantic and M/s Petronas. 11. Ld.Additional Commissioner (A.R.) also reiterates the above reproduced findings and argued on the same lines. 12. We find that the arguments of the ld.Departmental Representative as well as the findings recorded by the adjudicating authority on merits seems to be mis-directed to hold that the appellant SGSPL is a job worker under the provisions of Rule 10A of Central Excise Valuation Rules, 2000 for more than one reason. 12.1 Firstly, the agreement which was entered by the SGSPL with Atlantic was prior to 01.04.2007. The said date is important as the provisions of Rule 10A came into existence from that date i.e. to say that the appellants were engaged in manufacturing and clearance of the product with the said atlalntic prior to introduction of said provisions on the very same terms and conditions. We also find on perusal of the agreement that the agreement indicate the sale a....
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....greements. The above facts read with other clauses of the agreements and the sales documents relied upon by the appellants give a clear indication that the transactions between the OEMs and M/s Symphony are sale transactions and not a case of job work on the raw materials/goods supplied by M/s Symphony. There is no doubt a considerable initiation and monitoring on the part of M/s Symphony to assist the OEMs in getting the timely supply of raw materials at negotiated price and then making prompt payments to vendors with respect to the raw materials purchased by the OEMs. Such initiations, monitoring and supervision of the manufacturing activities is purely a professional and commercial approach on the part of the brand owner to sustain its business, profitability and also to maintain quality and timely supply of finished goods to the market to fulfill its sales commitments. 11. In the light of the observations made above, the transactions between the appellants and M/s Symphony are held to be sales transactions. Under Section 4(1) of Central Excise Act, 1944 even if the price is not the sole consideration but still certain additions are required to be made then also Section 4(1)(....
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....predominantly supplied free of charge by a person to the manufacturer of goods then only the Valuation can be made under Rule 10A of the Valuation Rules, 2000. In a case of sale of goods where some inputs/goods are supplied free of charges, will still be a situation covered under Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 6 of Central Excise Valuation Rules, 2000. The interpretation will only be a harmonious construction for the valuation of Central Excise goods under Section 4 of Central Excise Act, 1944, read with Rule 6 or Rule 10A of Central Excise Valuation Rules, 2000. In the present proceedings, Revenue has not been able to establish that inputs are predominantly supplied by the brand name owner free of charge. It is not disputed by the appellants that additional value consideration with respect to moulds and assembly lines is not required to be added to the assessable value under Section 4(1)(b) read with Rule 6 of the Valuation Rules, 2000. under Rule 6, money value of any additional consideration flowing directly or indirectly from the buyer; in the form of materials, components, parts, tools, dies, moulds, drawings, blue prints, technical maps, charts....