TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 420
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....ll these appeals since relating to the same issue, they are taken up together for disposal. 2. The facts of the case are that Sujhan Instruments (hereinafter referred to as Sujhan) are engaged in the manufacture of electronic devices such Fan Speed Controller / Dimmers / TVCo-oxial Socket outlet, Computer jack etc. Pursuant to an audit of the records, it emerged that theyhad enteredinto an agreement with M/s.Honeywell Electrical Devices and Systems India Ltd. (hereinafter referred to as Honeywell). It appeared to the department that - a) The assessee is manufacturing for M/s.Honeywell on contract basis b) The price adopted by the assessee is only the cost of production at their hand as evidenced from the cost sheet prepared. c) The good....
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....on 4 (1) (b) of the Act. Various show cause notices were issued to the assessee for various periods inter alia demanding differential duty liability with interest thereon and also proposing imposition of penalties under various provisions of law on Sujhan and Honeywell. The details of SCN, periods involved, impugned orders etc., are as follows :- Appeal No. Period SCN No. & Date Order in Original No. Order in Appeal No. Amount of Excise Duty INR Amount of Penalty INR E/00810/2010 (Appeal by Sujhan) April 2007- July 2009 104/ 2009 dated 23.10.09 20/2010 dated 03.09.10 - 1,77,73,275/ - 1,77,73,275/- E/00001/2011 (Appeal by Honeywell for Penalty) April 2007 - July 2009 - 20/2010 dated 03.09.10 - - 2,00....
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....y an objection in respect of the issues framed by the adjudicating authority. Towards this end, he takes us to para 11.1 of the order dt.3.9.2010 (Impugned order for Appeal E/810/2010 to point out that where the adjudicating authority had framed the issues as under : a) whether the activities of M/s.Sujhan Instruments are to be treated as those of a 'job worker' on behalf of M/s.Honeywell i.e. 'job worker to principal' or b) whether activities of M/s.Sujhan Instruments are to be treated as 'manufacture' and relationship between M/s.Sujhan and M/s.Honeywell is on a 'principal to principal basis'. ii) Ld. Advocate submits that the issue should have been framed in the other way round and that only after eliminating the applicability of Se....
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....ors designated by Honeywell they were not obtained free from the latter. vii) For specifying the vendors for raw material by Honeywell provisions of Section 10 (a) cannot be invoked. Ld. Advocate relies upon the Tribunal decision in Coromandel Paints Ltd. Vs Commissioner of C. Ex., Visakhapatnam - 2010 (260) ELT 440 (Tri.) where it was clearly held that no duty demand on this ground can be raised against the assessee. viii) In respect of Appeals E/40964/2013 & E/40965/2013 filed by the department, Ld. Advocate submits that common impugned order No.12 & 13/2012 dt. 30.1.2013 of commissioner (Appeals) has gone into all aspects of matter and arrived at the reasoned finding that the relationship between Sujhan and Honeywell is only on princip....
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..... 8.3 A perusal of the SCN No.104/2009 dt. 23.10.2009 reveals that department is inclined to treat Sujhan as a job worker of Honeywell primarily on the grounds that supplies of raw materials that required to be approved by the latter, quality control exercised by Honeywell, 99%of the finished goods are sold to the latter and that Honeywell's brand name and MRP stickers are used on the packing. The Rule 10A has been inserted in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, w.e.f. 1.4.2007. As per this rule, the value at which principal manufacturer sells his goods will be the basis for determining the transaction value for payment of Central Excise duty by the job worker. For the purpose of this rule, the j....
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....asis. The arrangement between Sujhan and Honeywell, in our view, is on the lines of 'contract manufacturing' as distinguished from 'job worker'. The contract manufacturers are not supplied with the raw material from principal manufacturers, like 'job workers', butthey are required to purchase them from the market, very often from vendors who are approved by the principal manufacturer for quality point of view. The principal then buys finished products from the contract margin and very often sales them to his core customer, sometimes with enhanced margin. Department has also not unearthed or brought out anything on record to suspect that the contract between Sujhan and Honeywell is only a camouflage for job working. There is also no evidence....