TaxTMI 
TaxTMI 
2023 (2) TMI 1232
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....oking proviso to section 11A (1) of Central Excise Act, 1944. 3.3.2 I order recovery of the aforesaid amount of duty confirmed from the noticee alongwith interest under section 11 AB of Central Excise Act, 1944. 3.3.3 I impose a penalty of Rs 1,15,44,696/- (Rupees One crore Fifteen Lakhs Forty Four Thousand Six Hundred and Ninety Six only) under the provisions of Section 11AC of Central Excise Act, 1944 which shall stand reduced to 25%, if the entire amount of demand is paid along with interest and penalty within 30 days of the receipt of this order in original. 3.3.4 I impose a penalty of Rs 12,00,000/- (rupees twelve Lakhs only) on Noticee No 1 under rule 25 of the Central Excise Rules, 2002. 3.3.5 I order confiscation of impugned goods under rule 25 of the Central Excise Rules, 2002. However, redemption fine in lieu of the same is levied at Rs 30,00,000/- only (Rupees Thirty Lakhs only) 3.3.6 I impose a penalty of Rs 12,00,000/- (rupees twelve Lakhs only) on Noticee No 2 under rule 26 of the Central Excise Rules, 2002. 2.1 Appellant is engaged in manufacture of the goods falling under Chapter 72 of the Central Excise Tariff. Apart ....
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....Bang)] affirmed at [2010 (260) ELT A84 (SC)] 3.3 Learned authorized representative re-iterates the findings recorded in the impugned order and would rely on the decisions in case of a. Jay Engineering Works [1997 (93) ELT 492 (T)] b. Thermax Babcock Wilcox Ltd. [2018 (364) ELT 945 (T-LB)] c. International Auto Ltd [1999 (35) RLT 58 CEGAT] d. Jay Yushin [2000 (119) ELT 718 (T-LB)] 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of argument. 4.2 The issue involved in the present case is identical to the issue involved in the cases referred to by the counsel for appellants. In case of Raaja Magnetics Ltd. , supra following has been observed: "2. The brief facts of the present case are that the respondent is a manufacturer of electrical stampings falling under Chapter 83 & 85 of the First Schedule of the Central Excise Tariff Act, 1985. In addition to the manufacturing and clearance of their products, the respondent/assessee also engaged in the manufacture of excisable goods on job work basis. The said job worked excisable goods are cleared on payment of duty by taking into c....
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....(Tri. Mumbai)] = 2003-TIOL-88- CESTAT-MUM. He further submitted that the full conversion charges are required to be loaded on the costing of raw material at job worker's end to arrive at the correct assessable value and deducting the portion of scrap credit from the assessable value will amount to non-inclusion of total conversion charges into the assessable value. 5. On the other hand, the learned counsel for the assessee defended the impugned order and submitted that the issue involved in the present case is no more res integra and he relied on the decision in the case of PR Rolling Mills Pvt. Ltd. Vs. CCE, Tirupathi [2010(249) ELT 232 (Tri. Bang.)] = 2009-TIOL-2575- CESTAT-BANG wherein the Division Bench of this Tribunal in similar facts has held that the value of scrap not includable in assessable value. In this regard, paras 6.3 and 6.4 of the decision of the Tribunal are relevant and are reproduced below:- "6.3 We find that the General Engineering case was decided on 10-3-2005 but the International Auto case was decided later on 17-3-2005. This case has been applied to the M/s. Lawkim Ltd. case, whose facts are identical to the present case. If the inter....
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....eared by Appellant under job work are as per the cost arrived at as per CAS -4 plus 10% i.e. as per Rule 8 of the Central Excise Valuation Rules, 2000. Department wants to add the value of scrap arisen during the conversion of goods and retained by the appellant applying to Rule 6 read with Rule 10A(iii) of the Central Excise Valuation Rules, 2000. The appellant submitted that during costing of the goods manufactures on jobwork basis, they have taken the landed cost of the goods considering cost of the raw material, transportation charges, burning loss which includes scrap arisen and conversion charges as per agreement. In this regard they submitted some sample purchase invoices and corresponding sale invoices and pleaded that for valuation of goods under job work, Rule 11 of the Central Excise Valuation Rules, 2000 are to be resorted to under which the Ujagar prints formula is to be applied. The show case notices issued in the case to the appellants and the impugned orders are also seeking to value the goods of the appellant cleared under job work as per the Ujagar Prints formula with the difference that Rule 11 read with Rule 6 of the Central Excise Valuation Rules, 2000 is sough....
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.... 25. In case of Commissioner of C. Ex. Nagpur Vs. Llyods Steel Industries Ltd. 2007(213)E.L.T. 339(SC), which is relied by the Lower Authority, the Hon'ble Supreme court held that "if by retaining scrap/..waste the conversion charges get reduced, then the value of scrap / waste will have to be added to the conversion charges. 26. However I observed that in the present case, the lower authority has not shown any evidence / logic that how they decide that the retention of scrap has depressed the conversion charges. The lower authority simply add sale proceeds of scrap retained by the appellant in assessable value for demanding differential duty holding that it is an additional consideration. On the contrary the appellant has submitted some of the sale invoices of scrap to my perusal which shows that the rate of scrap was always fluctuating, thus sale proceeds from scrap was variable whereas the conversion cost during the period was fixed as determined by the job work agreement with the principle manufacturer. If we assume that the conversion charges have been determined taking into consideration of value of scrap retained, then it will always be a loss to either job....
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....e goods produced by the job worker. However, similar issue was considered by the Hon'ble Apex Court in the case of International Auto Ltd. cited supra. In that case, the appellant was a job worker for floor plate assemblies for TELCO. The said assemblies were used by TELCO in the manufacture of excavators. TELCO supplied inputs to the appellant for the purpose of manufacture of assemblies on which credit had been taken by TELCO. The appellant used TELCO's inputs as well as its own inputs in manufacturing the assemblies. It cleared the assemblies from its factory upon payment of excise duty on the completed floor plate assemblies by including the value of only the inputs put in by the appellant and adding, thereto, its service charges. However, revenue proceeded against the appellants with a show cause notice proposing the inclusion of the value of TELCO's inputs in the assemblies for the purpose of duty. The appellant challenged it. The Tribunal confirmed the stand of the revenue by relying on the Apex Court's decision in the case of Burn Standard-Co. Ltd. and Another u. UOI- 1992 (60) E.LT. 671 (S.C.). When the issue reached the Apex Court, the Apex Court reversed ....
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.... days, the manufacturer shall pay an amour equivalent to the Cenvat credit attributable to the inputs or capital goods by debiting the Cenvat credit or otherwise, but the manufacturer can take the Cenvat credit again when the inputs or capital goods are received back in his factory." In such a situation, a job worker who manufactures the intermediate product, is not liable to pay any duty thereon. 6. Rule 4(6) provides that the Commissioner of Central Excise having jurisdiction over the factory of the manufacturer of the final products who has sent the inputs or partially processed the inputs outside his factory to a job worker, may allow final products to be cleared from the premises of the job worker subject to such conditions as he may impose in the interest of revenue including the manner in which duty, if leviable, is to be paid. A combined reading of the above rules would clearly show that where a person is taking Cenvat credit on the inputs, he can send the inputs to the job worker for the manufacture of intermediate product and bring the intermediate product to his factory for further use in the manufacture of final product and either clear the final product on pay....
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....ntion that 'there was no intention to evade payment of duty as the entire duty paid by Jay Yuhshin was available as credit to MUL. Following the Larger Bench's decision, the Division Bench of the Tribunal upheld the Commissioner's order and rejected the appeal of the assessee, in its order reported at 2001 (137) E.LT. 1098. The matter was carried in appeal to the Apex Court which, vide its decision cited supra, held as under:- 6. We are of the view that the submission of the appellant is correct. The Tribunal appears to have been confused between the manufacture of the final product, namely, excavators and the manufacture of the intermediate product, namely, the floor plate assemblies. The scheme of Modvat permits the person who clears the ultimate final product to take the benefit of the Modvat scheme at the time of clearance of such final product. The manufacturer of the final product, in this case TELCO, would therefore, be entitled not only to adjust the credit on the inputs supplied by it to the intermediate purchaser such as the appellant but also to the credit for the duty paid by the intermediate purchaser on its products. The reliance on the decision i....
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....vement of goods purchased by Tecumseh Products India Pvt. Ltd. and supplied to Lawkim Ltd. was not under Modvat Rules, does not exist. The decision in the case of Mahindra Ugine Steel Co. Ltd. (Final Order No. A/60-63/07/C-1 dated 23-1-2007 [2007 (211) ELT. 73(T)]) holding that value of scrap/waste retained by the job worker is to be included in the value of components manufactured on job work basis as realization of sale proceeds would amount to additional consideration, relied upon by the learned SDR to support the findings of the Commissioner, does not come to the rescue of the Revenue, in view of the fact that in the International Auto case, the Apex Court has distinguished the decision in Burn Standard Co. Ltd. [1990 (60) E..L.T. 671 (S.C.)] which was relied upon by the Tribunal in the Musco case, as seen from Paragraph 6 of the International Auto judgment. 8.1The ratio of the International Auto Ltd. judgment is applicable on all fours to the facts of the present case and following the ratio thereof, we set aside the Impugned order and allow the appeals." 6.3 We find that the General Engineering case was decided on 10-3- 2005 but the International Auto case was decide....
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....sable value of goods and the retention of scrap/ waste does not depress the conversion charges. 30. As regarding landed cost of the raw material, there is no dispute. The Show cause notice and Order-In-Originals nowhere dispute this claim of the appellant. In fact in the show cause notice and order-in original it is stated that "Noticee were taking cenvat credit of duty paid on the billets/ blooms received from the principal manufacturer and were clearing the rolled products manufactured therefrom, an payment of duty on value arrived at by adopting costing method i.e. landed cost of raw material plus conversion charges". 31. Further as discussed earlier, I find that sale proceeds from scrap arised and retained by the Appellant was having no effect on the conversion charges. 32. I further observed that the Commissioner (Appeals) Nagpur while deciding the stay application in appeal No. 252/10 and 253/10, observed that the case is identical with case of P R Rolling Mills Pvt. Ltd. Vs. CCE 2010 (249) ELT 232 and the said decision has been challenged by the Department in the Hon'ble Supreme Court and hence recovery of dues unconditionally stayed till the d....