TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1107
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.... project executor that were then delivered at the site of M/s Jindal Steel Works Ltd under cover of invoices evidencing payment of appropriate duties of central excise. As these same equipment also happened to be billed separately by M/s Morgan Construction Co Pvt Ltd to M/s Jindal Steel Works Ltd at prices different from, and higher than, that in the excise invoices of M/s Patel Profiles Pvt Ltd and M/s Excel Tech Engineers Pvt Ltd, jurisdictional central excise authorities objected to the value adopted for computation of duties of central excise by insisting that rule 10A of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 required that the value in the commercial invoices of M/s Morgan Construction Co India Pvt Ltd should instead have been. 2. It was alleged that M/s Patel Profiles Pvt Ltd had effected clearances to the project site by discharging duty liability of Rs. 11,70,248 on assessable value of Rs. 81,15,466 on which M/s Morgan Construction Co India Pvt Ltd had raised invoices of Rs. 92,15,555 on M/s Jindal Steel Works Ltd resulting in short-payment of Rs. 1,58,635. Recovery of the said amount under section 11A of Central Excise Act, 1944, along wit....
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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 another person authorised by him.' therein. That logic does not appeal as it is not conceivable that liability under a rule can be triggered by an Explanation below it and, more especially, from a definition that is contextual in a transaction with 'job-worker' being adjunct thereto. More so, from lack of acknowledgement of such entity in the Central Excise Act, 2004 or the versions of Central Excise Rules despite that model of production having been in existence for a long while, is the unlikelihood. Taxation of produce of 'job-worker' was also not impeded for several years after the rules for valuation was notified. It would appear, therefore, that, save for certain specific purpose, such as determination of 'duty liability' or entitlement to 'exemption', 'job-worker' has no legal existence in central excise law other than as a manufacturer. Moreover, the lack of definition of the other expression - 'principal manufacturer' - in the Explanation supra or in the statute would make it appear that 'job-worker' is nothing but an ancil....
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.... The belated interpolation of rule 10A in the said Rules also points out to the same want of definition. 7. In effect, a 'job-worker' works on raw materials supplied by the 'principal manufacturer' and is denied an option to sell the goods that emerge thereby and, in that context, the liability fastened on to someone, other than the manufacturer, on the basis of contract of price. It is seen from the records that on a former occasion when the taxability of 'set-top-boxes' and non-inclusion of the value of material supplied therewith, rule 6 of the said Rules was held to be appropriate in accordance with '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, - 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; (iii) in a case not co....
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....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 view, the learned Commissioner is justified in having claimed support from the decisions in the cases of Poona Bottling Co. Ltd. etc. 7.5 The third requirement [vide para (7.1) supra] for the assessees to be job workers of TUPPERWARE has also not been satisfied in this case inasmuch as the goods were not manufactured from any inputs supplied by TUPPERWARE or by any other person authorized by them. It is not in dispute that the necessary raw materials and packing materials were procured by the assessees from suppliers named by TUPPERWARE. The cost of these materials were expressly recognized as expense of the assessees. That the suppliers were chosen by the assessees from a panel furnished by TUP....
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....be on principal to principal basis and all applicable taxes on such sale shall be paid by Coromandel at the time of its supply. For all statutory purposes, including payments of taxes, compliance of labour and other loss, including the responsibility of manufacturing quality paints as per the prescribed specification, M/s. Coromandel Paints Ltd. shall be manufacturer and is expected to discharge the entire liability cast on them as manufacturer, under this agreement. Excise duty, sales tax and other levies will have to be paid by Coromandel treating the same as sales to Sigmakalon, on the full value determined and agreed between the parties from time to time." 12. It was argued by the ld. SDR relying on the findings by the lower authorities that the said clause is only for the limited purposes of defining the remuneration/margin of profit for discharge of applicable taxes. It can be seen from the above reproduced clause, entire tenor of the agreement was for manufacture and supply of paints, is totally on principal to principal basis and the indication in the said clause specifically indicates that all the taxes have to be paid on such sale prices at the time of supply of ....
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....nd Honeywell is only a camouflage for job working. There is also no evidence put forth to indicate that apart from the value invoices by Sujhan to Honeywell there is an additional value component which is separately paid by the latter to the former or that there is any additional flow back of funds. This being the case, there is no reason on account of invoice value between Sujhan and Honeywell should not be treated as the ―transaction value‖ under Section 4 (1) (a) of the Central Excise Act, 1944. 8.6 While arriving at this conclusion, we draw sustenance from the ratio of the Tribunal's decision in Coromandal Paints- 2010 (260) ELT 440 (Tri.- Bang.). In that case, the Coromandal Paints and SIPL had entered into agreement for manufacture and supply of paints, with all taxes to be paid on sale price by the latter. The agreement indicated that prices charged by the former are treated as sale to SIPL on which value Central Excise duty and sales tax was being discharged. The Tribunal following the ratio already laid down in Gillette Diversified Operations Ltd. Vs Commissioner - 2007 (217) ELT 51 (Tribunal) held that by merely indicating vendors of raw materials or by giv....
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.... value determined in such manner as may be prescribed. Explanation.- For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. (2) xxxx (3) For the purposes of this section,- (a) "assessee" means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) persons shall be deemed to be "related" if- (i) they are inter-connected undertakings; (ii) xxxxxxx Explanation.-In this clause- (i) "inter-connected undertakings" shall have the meaning assigned to it in clause (g) of section 2 of Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969); and (ii) "relative" shall have the meaning assigned to it in clause (41) of Section 2 of the Companies Act, 1956 (1 of 1956); (c) "place of removal" m....
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....rtainment of determination by the central excise authorities of that lack in the value adopted by M/s Patel Profiles Pvt Ltd and M/s Excel Tech Engineers Pvt Ltd for clearance of the impugned goods. We turn to address that with the presentations at the bar to enlighten us. 8. Learned Counsel for appellants contended that both M/s Patel Profiles Pvt Ltd and M/s Excel Tech Engineers Pvt Ltd are suppliers of goods that M/s Siemens Ltd, contracted by M/s Jindal Steel Works Ltd to execute a turnkey project, ordered with them for delivery at site on 'principal-to-principal' basis and such delivery at the site of the project does not render those to have been on behalf of the buyer of the goods. It was also argued that the method of payment adopted by the M/s Jindal Steel Works Ltd did not alter the transactional engagement among the appellant-companies to resort to the valuation scheme in the Rules. Furthermore, it was contended that the manufacturing process was not limited to the 'cost-free' supply effected by M/s Siemens Ltd but required other materials too. Reliance was placed on the decision of the Tribunal in Commissioner of Central Excise, Hyderabad v. Innocorp Ltd [2013 (9) TMI ....
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.... the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of said goods from the factory of job-worker; (iii) in a case not covered under clause (i) or (ii), the provisions of foregoing rules, wherever applicable, shall mutatis mutandis apply for determination of the value of the excisable goods : Provided that the cost of transportation, if any, from the premises, wherefrom the goods are sold, to the place of delivery shall not be included in the value of excisable goods. Explanation. - For the purposes of this rule, job-worker means a person engaged in the manufacture 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.' of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is attracted as the two vendors in the impugned transactions are 'job-workers' within th....
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....on value without having to be dealt with as 'job-work' is apparent from rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Even where all inputs are supplied by the 'principal manufacturer', that does not suffice for invoking rule 10A of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 which is intended when the 'principal manufacturer' contracts for the said goods to be sold to the buyer from the premises of the 'job-worker' only with either section 4 or by deployment of some other rule in other cases Thus, even though rule 10A of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is intended for 'job-work', it does not come into play for all manner of 'job-work' but only when 'inputs' are supplied and sale is effected to the buyer by the principal manufacturer. 13. It is the imperative of a want in the 'transaction value' of the assessee that is contemplated, by the rules intended by section 4(1)(b) of Central Excise Act, 1944, to stand in as alternative in the design of each of the methods of valuation in Central Excise Valuation (Determination of Price of Excisable Goods) Rul....