TaxTMI 
TaxTMI 
2018 (7) TMI 420
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....ith 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 goods enter into the market from the hands of M/s.Honeywell. d) There is a difference of 200 to 400% in the sale price of the goods from M/s.Honeywell when compared to the sale price ofthe assessee to M/s.Honeywell. e) Thebrand name is owned by M/s.Honeywell and the intellectual property rights of the products manufactured by the assessee rest with M/s.Honeywell. f) With the affixing of the brand name, as the ownership of the products rests with M/s.Honeywell, the assessee has no right to sell the goods. g) When there is no right to sell the goods, the amount received by the asessee is only compensation of the expenditure incurred by the assessee and received by him through sale invoices raised. h) the declaration made in the MRP stickers as 'Specially manufactured for Honeywell Electrical Devices and Systems India Ltd. by M/s....
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....hence these appeals by Sujhan and Honeywell. 3. In appeals E/40964 & 40965/2013, the adjudicating authorities were of the level of Additional Commissioner, who confirmed the proposals in the respective SCNs; on appeal, the Commissioner (Appeals) concerned, set aside the orders of the adjudicating authority and allowed the appeals of the assessee. Hence department have filed these appeals. 4. In appeal E/40261/2014, the proposals in the related SCN were confirmed by the adjudicating authority which on appeal was upheld by the Commissioner (Appeals), hence the appeal by Sujhan. 5. Today when the matter came up for hearing, on behalf of assessee, Ld. Advocate Joseph Prabhakar made various submissions which can be broadly summarized as under : i) In the first place, Ld. Advocate has sought to convey 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....
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...., 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 principal to principal and that there is no complete control of the manufacturing process of the former by the latter. Ld. Advocate therefore submits that there is no merit in the departmental appeals and they may therefore be rejected. 6. On the other hand, Ld.A.R Shri K.P.Muralidharan supports the impugned orders. 7. Heard both sides and have gone through the facts of these cases. 8.1 Ld. Advocate has found fault with the framing of issues by the Commissioner in the impugned order dt.3.9.2010 (impugned order for Appeal No.E/810/2010 & E/1/2011) that the adjudicating authority should have examined the issue first under section 4 (1) (a) of the Act and not under Rule 10 (a) of the Valuation Rules. We are not able to appreciate this contention. For one thing, the related SCNs have alleged that the assessees having fallen out of the scope of Section 4 (1) (a) and hence would fall in Rule 10 (a) of the Valuation Rules. In fact, the major th....
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.... of Central Excise duty. The goods are cleared by Sujhan to Honeywell only after discharge of Central Excise duty on the assessable value and the value indicated in the invoices from Sujhan to Honeywell. 8.5 Thus just because the goods manufactured or produced by Sujhan are purchased by Honeywell on contract that should detract from acceptance of the transaction between Sujhan and Honeywell to be one of principal to principal basis. 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 put forth to in....