TaxTMI 
TaxTMI 
2020 (3) TMI 907
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....ed by M/s. M & M; that M/s. M & M would give its own Radial Drilling Machine for enabling machining of certain tractor components; that the price of individual components would be finalized after development of tractor components based on machine-hour rate, operation time, overhead, profits to be worked out on the basis of volumes projected by M/s. M & M, etc.; that therefore, since the goods manufactured for M/s. M & M were being captively consumed, the assessable value was required to be arrived at on costing basis in terms of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Rule 10A ibid, according to which the costing should include an additional 10% of the production cost. 2. Show Cause Notices were issued proposing to demand duty short paid in respect of the clearances made by the appellant to M/s. M & M for various periods under Section 11A (1) of the Central Excise Act, 1944 along with applicable interest and penalty. 3.1 The appellant thereafter filed detailed replies highlighting the clauses in the agreement that, in essence, the manufacture was on principal-to-principal basis which was sold to M/s. M & M. It w....
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....65,619/- TIE - Balanagar 6. E/30088/2017 Jan' 2015 to Oct' 2015 27.01.2016 1,07,44,644/- Medchal 7.2 He also relied upon the decision of the Co-ordinate Ahmedabad Bench of the Tribunal in the case of M/s. Rolastar Pvt. Ltd. Vs. Commissioner of Central Excise, Daman reported in 2012 (276) E.L.T. 87 (Tri. - Ahmd.) and contended that the issue has already been decided and hence, no more res integra. 8. Per contra, Ld. Departmental Representative for the Revenue supported the findings of the lower authorities. 9. We have heard both sides and perused the documents placed on record. 10.1. The agreements are placed on record and a perusal of the same makes it clear that there was no scope for treating the appellant as an agent of M/s. M & M in any respect and for any purpose whatsoever. It is also made clear that M/s. M & M has agreed to purchase the components from the appellant and further, it has also an insurance clause requiring insuring of premises as well as the equipment with premia being paid by the appellant. 10.2 There is no dispute that the appellant has in fact discharged the duties before supplying the goods in question to M/s. M & M which....
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....ns of Rule 8 of the Central Excise Valuation Rules will not also apply in this case for the simple reason as the said provisions only discuss about the captive consumption of the goods by the manufacturer himself or on his behalf. 7. We find that an identical issue in the 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 t....
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....sable Goods) Rules, 2000 has to be gone through serially. It is not the Revenue's case that provisions of Rule 3, 4, 4, 6 and 7 would also apply in this case. Revenue is of the view that provisions 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 ....
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....le in view of the foregoing reasons. The views expressed in the Circular are inconsistent with the provisions of Rule 8. The provisions of Rule 8 can be brought into play only if there is consumption of the goods by himself or 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 : ....
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.... with Rule 6(b) read with the Apex Court decisions referred to above. 3. 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 a....
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....as to be done as provided under Rule 10A(iii). By elimination of Rule 2 to 10 as 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 b....
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.... captively either by himself or on his behalf. The said Rule would have been applicable if M/s. Sai Flipped Coil Pvt. Limited would have manufactured the goods themselves and then used the same captively. In the present case the appellant is an independent manufacturer who had manufactured the goods out of the raw material supplied by M/s. Sai Flipped Coil Pvt. Limited, instead of using its own raw material. He is not the manufacturer who is further consuming the goods captively for his own manufacturing activities. The fact, whether the person who has sent the raw material and to whom the final products stand cleared by the job worker has used the same captively or has sold the same in market, would not change the situation, so as to not to apply the principles laid down by the Hon'ble Supreme Court in the case of Ujagar Prints for the purpose of arriving at the assessable value." After noting the above, the Bench felt it proper to set aside the impugned order. 12.1 It was also brought to our notice that the above decision of the Tribunal has been upheld by the Hon'ble Supreme Court by dismissing the Civil Appeals filed by the Revenue in Civil Appeal Nos. 1988-1989 of 2012 w....