TaxTMI 
TaxTMI 
2026 (9) TMI 1282
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.... purpose of discharge of duty on such clearance, the assessable value of the said coke was determined on the basis of landed cost of coking coal at the appellant's factory, adding there with the conversion charges which included the appellant's profit. In arriving at such assessable value thereof, the landed cost of the coking supplied to Ms Usha Martin Limited, was taken and thereafter, the conversion charges were included along with products and after adjustment in respect of the value realised from the by-products arising in the course of such manufacture and pay duty thereon. The said payment of duty on such value has been supported by a cost Accountant's Certificate. 4. It was alleged that values adopted by the appellant were not in accordance with Section 4 of Central Excise Act 1944 read with Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 ['Valuation Rules' for short] and that the appellant ought to have determined the assessable value by adopting the method contemplated under Rule 10A with Rule 8 thereof, on the basis of which the aforesaid differential demand came to be raised and confirmed. 5. The Ld. Counsel appeari....
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....l held that by applying the Ujagar Prints (supra) principle and not by forcing the case into Rule 8 merely because the principal manufacturer consumed the goods after their receipt from the job worker. The same view has expressed in Rolastar Pvt. Ltd. Vs. Commissioner of Central Excise reported in 2012 (276) ELT 87 (Tri.-Ahmd.), wherein this Tribunal held that in a case where the goods manufactured on job work basis were sent back to the principal manufacturer and used by the latter in further manufacture, Rule 10A(i) and Rule 10A(ii) were not applicable, Rule 8 was not attracted since the goods were not consumed by the assessee or on his behalf and valuation has to be proceeded on the basis of cost of raw materials plus job work charges. 16. Therefore, we hold that the demand cannot be raised against the appellant in terms of Rule 10A (iii) read with Rule 8 of the Valuation Rules, 2000 and the appellant has paid the duty correctly. 10. We find that as the facts are identical to the facts in the case for the earlier period, the ratio laid down therein is squarely applicable to the facts and circumstances of the present case. 11. We find that the said issue has been e....
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....horised by him. 5.3 Rule & of the Central Excise Valuation Rules, 2000 also reads as follows:- "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 value shall be one hundred and ten per cent of the cost of production or manufacture of such goods". 5.4 From a reading of the above Rules, it is seen that sub-rule (i) of the Rule 10A deals with a situation where the job worked goods are sold by the principal manufacturer. This situation does not arise in this case. The principal manufacturer does not sell the goods but consumes it in the packing of hair oil and other products. Sub-rule (ii) of Rule 10A also does not apply because that rule envisages sale of job worked goods from a place from where the goods are to be sold after clearance from the factory of the job worker. The department's case is that Rule 8 would apply, but reading of the Rule clearly indicates that it applies to a situation where the goods are captively consumed by the assessee or on his behalf in the production/manufacture of other articles. The manufacturer/assess....
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....one reason. Firstly, the provisions of Rule 10(a) will apply only to the job worker who completes the job work and puts the finished goods into the market as directed by the principal-manufacturer or sends it to the depot of the principal manufacturer for further sales. In the case in hand, it is undisputed that the job worked hallow profiles are dispatched to the principal-manufacturer and consumed in the further manufacturing of final products. Secondly, provisions 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....
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....arlier paragraphs. Provisions of Rule 10A(iii) gets attracted which talks about a situation where 10A(i) or (ii) does not apply. The said provision (iii) very clearly mandate that in a case not covered under clause (i) or (ii), the provisions of foregoing rules, wherever applicable shall mutatis and mutandis apply for determination of value of the excisable goods. This would indicate that the provisions of Central Excise Valuation (Determination of Price of Excisable 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 t....
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....ker are used for captive consumption by the principal manufacturer, in such cases their value would be determined in terms of clause (iii) of Rule 10A read mutatis mutandis with Rule 8 of the Valuation Rules which provides for taking of 110% of the cost of production of the goods. (Madan Mohan) Under Secretary (CX.I) 8.1. It can be seen that the clarification issued by the C.B.E. & C. seems to be untenable 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. Th....
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.... buyer (or the supplier of the raw materials), where the dealing between the two are on principal-to-principal basis. The mere fact that the buyer is supplying some raw materials free of cost to the job worker, will not be sufficient ground to contend that the dealings between the two are not at arms length Goods manufactured on job work were earlier assessed under the residuary Rule 7 of the erstwhile Valuation Rules of 1975 read 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 1-72000 will continue to be valued in the same manner as they were being valued before 17-2000. 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 p....
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....t of the goods manufactured by a job worker will consist of the total of the cost of raw material, manufacturing cost and the manufacturing profit. Rule 11 is residuary rule determining the value. In other words, the value of such goods manufactured on job work will be governed by the ratio of the judgment of the supreme court in Ujagar Prints." 11. That still leaves us with a question of how the determination of value has 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 appellan....
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....nt appellant at the rate of 110% of the cost of the goods. We reproduce the Rule 8 of the Valuation Rules, 2000 as under :-"Where the excisable goods are not sold by the assessee but are used for consumption by him or his behalf in the production or manufacture of other articles, the value shall be [one hundred and ten per cent] of the cost of production or manufacture of such goods" As is clear from the above, Rule 8 is applicable to the assessee who manufactures the goods and uses the same 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 and 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....