TaxTMI 
TaxTMI 
2018 (8) TMI 162
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....edule to Central Excise Tariff Act. During the period in dispute i.e January 2012 to March 2016, the appellant had entered into agreement dated 15 February, 2011, for manufacture and sale of the final product - wall putty, from their factory situated at Behror, District Alwar, for Asian Paints Ltd. (under their brand name). The consideration for such sales was mutually agreed price and the transaction between the two, as per the agreement, is on principal-to-principal basis. The appellant also discharged sales tax leviable on the sale price charged by them from Asian Paints Ltd. 3. The appellant have its own plant & machinery and undertook the manufacture of wall putty as a completely independent entity. According to the appellants, they are independent manufacturers and not a job worker. Whereas Revenue opined that under the terms of the agreement, the activity of the appellant is more in the nature of a job worker. Further, as the various activities of the appellants, like approval of source of raw material, quality control measures, audit by the said Asian Paints Ltd. from time to time in the plant of the appellant, 100% of the output under the brand name of Asian Paints Ltd.....
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....he 'premix compound' was supplied by another unit of the appellant company situated at Vadodara. The finished goods - wall putty was cleared to the various depots of Asian Paints as per their despatch directions. 6. Some documents were also resumed. 7. In the statement of Shri Sanjay Mahagoankar, he inter-alia stated that the premix compound - input was proprietary of Asian Paints formulation of which was strictly confidential and the same could not be disclosed to anybody under the agreement. On being specifically asked about the finished goods cleared in more than 25 Kg packs on transaction value, he stated that the same also bear the MRP imprinted on the package made by them as directed by Asian Paints Ltd. The packages also contain other informations like - manufactured at M/s. Miraj Drymix Pvt. Ltd, and marketed by Asian Paints Ltd., meaning thereby that the wall putty was being manufactured by the appellant on behalf of Asian Paints Ltd. In the case of 30 KG packing, they also put in the package a token of Rs. 60/- inside each bag (provided by Asian Paints Ltd.) meant for the painter to be reimbursed by Asian Paints Ltd. 8. That on being asked about the costing of th....
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....facture or production of goods on behalf of a principal manufacturer from any inputs or goods supplied by the said principal manufacturer or by any other person authorised by him. Thus, there appeared to be two main ingredients in this definition of 'job worker' : - "goods have to be produced on behalf of principal manufacturer from any inputs/goods supplied by the principal manufacturer or any person authorised by him." 12. On perusal of the agreement dated 15/07/2011 between the appellant and Asian Paints Ltd., the following clauses were taken notice of: - Clause D of the agreement read as under: "D. The Seller has further offered to manufacture and sell finished products as more fully set out in Annexure I ( hereinafter referred to as "the Products") to the Purchaser and the Purchaser has accepted the said offer based on the Seller's representations; on terms and conditions agreed to by the parties and set out hereunder." Clause 23: This Agreement shall be on a Principal-to-Principal basis. The Parties hereby confirm that this arrangement neither constitute on arrangement of agency nor purports to be on employment basis and underst....
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.... The Purchaser shall be entitled to reject the said products processed and manufactured by the Seller if they do not meet the Product specifications as required and communicated by the Purchaser and / or do not meet the requirements of applicable Indian laws. Clause 3(f) of the agreement dated 15.2.2011 The Seller agrees to use raw and packing material of desired quality as per specification given by Purchaser for manufacturing the Products. Seller will test these raw and packing materials as per instruction from purchaser at its own expense. Specifications and Testing methodology for Raw material, packing material and the Products are given in Annexure 2 and Annexure 3 respectively. Clause 4(f) of the agreement dated 15.2.2011 The Seller shall ensure that the raw and packing material purchased comply with specifications as given by the Purchaser. Such procurement by the Seller with the specified vendors would be on principal to principal basis. The Seller agrees to share information on Commercial negotiations. Clause 6(a) of the agreement dated 15.2.2011 The Purchaser has consented to purchase the Products from the Seller at a ....
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....of M/s. Asian Paints Ltd. Mumbai on which duty was paid. Differential value of goods as per Rule 10A of Valuation Rules, 2000 (as per Annexure A) C. Excise duty payable on the differential value. 1 1.1.2012 to 31.3.2012 42720651 61667350 6522984 2 2012-13 25724085 320983314 39673538 3 2013-14 352519715 414651809 51250964 4 2014-15 424979785 495226427 61273350 5 2015-16 375960886 438275377 54784422 Total 1453423122 1730804277 213505257 14. The Show Cause Notice was adjudicated by the Commissioner vide impugned Order-in-Original dated 21/07/2017 who confirmed the proposed demand along with equal amount of penalty under Section 11 AC(1)(c) along with interest. Further, penalty on the other appellant, Mr Ashok N Mehta, Chairman and Director, was also imposed to the tune of Rs. 75 lakh under Rule 26 and further Rs. 25 lakh under Rule 26 was imposed on Shri Sanjay Mahagoankar, the Assistant Vice President (Technical) and further, penalty was also ....
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....mmissioner has observed in the impugned order that, the Appellant received the formulation of the pre-mix from APL, which was the major input used in the manufacture of the final product. Thus, it appears that the Commissioner has treated the supply of such formulations as supply of inputs by APL in the capacity of principal manufacturer. It is submitted that, only supply of tangible inputs which are used as raw materials are relevant for the purposes of determination as to whether a transaction is job work or not. The status of such raw materials cannot be accorded to intangible information / specifications/ formulations/ technical know-how etc. by any stretch of imagination. This is clear from the bare language used in the definition of 'job work' which uses the phrase 'from any inputs or goods supplied by the said principal manufacturer'. In the light of the same, finding of the Commissioner is not legally sustainable. 19. It is most respectfully submitted that the Legislature in its own wisdom has included only the words "on behalf of" in the definition of 'job-worker' and any interpretation of the definition must be in consonance with the language of the law as well as the ....
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....ctivities were carried on job-work basis. • Receiving advance money for payment towards the purchases of raw materials is within normal commercial terms. • The fact that the compensation was based on the material cost along with specific profits cannot be used alone to uphold that there was job work manufacture. • Since no inputs were provided by the principal manufactures therefore, the activity was not job-work. 2. Abhishri Packaging Pvt. Ltd. [2013- TIOL-772- • The purchaser had employed its own employees at the factory of Appellant • Inasmuch as final products were manufactured by procuring raw material CESTAT- AHM for supervision and monitoring. • Moulds used for the manufacture, which were essential to the manufacture were supplied by the Purchaser. independently, the Appellant was an independent manufacturer. • There was no dispute that moulds were being supplied, and at most required redetermination of value under Rule 6. Rule 10A shall not apply in such case. 3 Ravi Kiran Plastics Pvt. Ltd.&....
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....ent transaction cannot be said to be one of job-work. 24. Furthermore, Rule 4 of Cenvat Credit Rules, 2004 clarifies the Legislature's intent behind the definition of 'job-worker". The Rule prescribes that, a manufacturer shall be entitled to take credit with respect to inputs when the goods are directly sent from the vendor to the job-worker. This can only be in a scenario wherein the principal manufacturer (viz. recipient of job-worked goods) has paid for the goods to the vendor and asked him to deliver the same to the job- worker. Thus, it becomes even more perspicuous from the said provision that the law pre-supposes free of cost supply of raw materials as a mandatory test in case of job work transactions. 25. It is humbly submitted by the learned advocate appearing for the appellant that the impugned order-in-original is founded on assumptions and presumptions and is self contradictory. The impugned order has confirmed all the allegations made by the SCN, without proper application of mind. The learned Commissioner has held that the relationship between APL and the appellants is that of a principal manufacture and job worker. It appears from the finding of the ld. Commis....
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....ed goods from the raw materials procured from the suppliers who were provided such supplies only as per specification and approval of Asian Paints. From the various clauses of the agreement between M/s Mirajdrymix and Asian Paints, it can be implied that the transactions were not at arms. Some of the terms of agreement implied that Asian Paints had propriety interest in the goods manufactured by the assessee, from the raw material stage itself. The agreement imposed many conditions on the assessee and consequently they had very little liberty in the matters relating to production. Therefore, I hold that that the assessee was manufacturing the goods 'for' Asian Paints and not 'on behalf of' Asian Paints and the scope of manufacturing activities of the assessee was that of 'job-work' as envisaged under Rule 10A of the Valuation Rules, 2000. It was not in dispute that the raw materials were supplied by the persons approved by Asian Paints and quality of raw material also examined by the nominated persons of Asia Paints." [Emphasis Supplied] 29. It is humbly submitted that the Ld. Commissioner has recorded a finding that the manufacture by the Appellants was 'for' and not '....
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....an Biscuit Company (P) Ltd. vs collector of Central Excise [1991 (53) ELT 595 Tribunal) as regards the relationship of principal and agent, and further relied on the rulings in the case of Siddho Sons vs. Union of India and others 1986 (26) ELT 881 (SC). 36. The learned AR for Revenue Mr. R K Mishra has supported the findings in the impugned order. He states that the supply of goods by the principal to the job worker can be both tangible and /or intangible. In the facts of the present case, Asian Paints Ltd. have supplied and/or shared their formula for manufacture of premix compound which is further required for manufacture of the Wall putty by the appellant. Thus, in the facts of the present case, sharing of the formula to manufacture premix renders the appellant as 'job worker' of Asian Paints Ltd. He has further relied on the final order of this Tribunal in the case of Hershey India Pvt. Ltd. vs CCE & ST, Bhopal, by a Coordinate Bench of this Tribunal being Final Order dated 19.01.2018 in Appeal No. E/50379/2017-DB wherein under the facts that Hershey India was engaged in manufacture of ready to drink iced tea under the brand name "Tealite lemon" and Tealite Apple" falling u....
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..... Zydus Wellness Ltd. and Rule 10 A of the Valuation Rules becomes applicable and the goods are required to be valued on the basis of price at which M/s. Zydus Wellness Ltd. sell the product/goods from the deport. 37. Accordingly, the learned AR for the Revenue prays for dismissing the appeal and confirming the impugned order. 38. In rejoinder, Shri V Lakshmikumaran states that this Tribunal should treat the preceding judgment in the case of Hershey India Ltd as per incuriam, firstly because Rule 6, which is applicable Rule, has not been considered. Secondly, in the final order of Hershey India Private Ltd. (supra), it has not considered the precedent judgements of this Tribunal in the case of CCE Hyderabad vs Innocorp Ltd. (supra), Prestige Engineereing (India) Ltd. versus CCE Meerut 1994 (73) ELE 497 (SC) and other judgements as noticed herein above by this Tribunal. Accordingly, he prays that the said judgment in the case of Hershey India Pvt. Does not hold a good law and, therefore, has no precedential value. 39. Having considered the rival contentions, we find that under the provisions of Rule 10A with Explanation, the condition precedent, i.e supply of raw material b....
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....PERWARE and selling the goods to them for a price at arms length on principal-to-principal basis. Therefore, the contention of the appellant that the respondents were manufacturing the goods as job workers "on behalf of" TUPPERWARE cannot be accepted. The second requirement noted in para (7.1) was, therefore, not satisfied in this case. 7.4 It is true that stringent quality standards were prescribed by TUPPERWARE to be strictly maintained by the manufacturers at every stage of the manufacture. TUPPERWARE could inspect the process of manufacture to ensure that the specified quality standards for the products were being maintained. They also had the liberty to reject the finished goods which did not conform to the specified standards. These things are part of normal commercial practice in respect of business houses who insist on the quality of their merchandise. These cannot be considerations to hold that the manufacturing activities of the assessees were under extensive control of TUPPERWARE reducing the status of the manufacturers to job workers. That the brand name of TUPPERWARE was affixed on the finished goods by the assessees is also immaterial. In this context, in our....