Customs, Excise & Service Tax
Appellate Tribunal West Zonal
Bench At Ahmedabad
REGIONAL BENCH-COURT NO. 3
Excise Appeal No. 10576 of 2014- DB
(Arising out of OIA-VAD-EXCUS-001-APP-495-13-14 dated 15/11/2013 passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-VADODARA-I)
Diamines And Chemicals Ltd
VERSUS
C.C.E. & S.T.-Vadodara-i
APPEARANCE:
Shri, Dhaval K. Shah, Advocate appeared for the Appellant Shri P. K. Singh, Superintendent (AR) for the Respondent
CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON’BLE MEMBER (TECHNICAL), MR. C.L.MAHAR
Final Order No. 11690/2023
DATE OF HEARING: 10.07.2023 DATE OF DECISION: 11.08.2023
RAMESH NAIR
The brief facts of the case are that the appellant are engaged in the manufacture of N-Methyl Pyrrolidone on Job-work basis on the input supplied by their principal M/s Alkline Almine Chemical Ltd (M/s AACL for short). The appellant availed the Cenvat Credit on inputs and discharged the duty liability on the finished goods on behalf of M/s AACL. The department has observed that the appellant were collecting certain amount towards Toll Charges or Conversion Charges, Trial Run Charges and Utility Charges from their principal M/s AACL. It was contention of the department that the said amount collected were flow of additional consideration and the same is liable to be included in the transaction value in terms of Section 4 of Central Excise Act, 1994 but the same were not included in the manufacturing cost.
Accordingly, on the said elements the demand of Central Excise Duty was raised for the period 01.08.2007 to 28.04.2009.
- Shri Dhaval K. Shah, Learned Counsel, appearing on behalf of the appellant submits that the appellant are paying the duty on the transaction value of the principal,at which the goods are sold by principal manufacturer, which is in terms of Rule 10A of Central Excise Valuation Rules, 2000. Therefore, no any other element can be included over and above the transaction value. In this regard he referred to the invoices issued by the appellant as Job-worker and corresponding sale invoice of the principal and pointed out that the transaction value, on which the Job-work goods were sold was adopted by the appellant for payment of Excise Duty, therefore, there is no short payment of duty.
- Shri P.K. Singh, Learned Superintendent (AR) appearing on behalf of the revenue reiterates findings of the impugned order.
- We have carefully considered the submission made by both the sides and perused the record. We find that there is no dispute that irrespective of any value of Job-work goods considering it as not a sale, the appellant have paid the excise duty on the same transaction value, at which the principal manufacturer has sold the goods to unrelated person. For ease of reference Job-worker’s invoice and it’s corresponding sale invoices issued by the principal manufacturer are Scanned below:
From the above invoices, it can be seen that the Job-worker’s invoice reference was given in the sale invoice of the principal manufacturer and it is observed that in both the invoices the assessable value is the same transaction value, at which the goods were sold by the principal manufacturer.
- In this fact the valuation of the goods is governed by Rule 10A of Central Excise Valuation Rules, 2000, which is reproduce below:
“[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;
- in a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of the job-worker, but are transferred to some other place from where the said goods are to be sold after their clearance from the factory of job-worker and where the principal manufacturer and 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 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 orabout the same time, at the time nearest to the time of removal of said goods from the factory of job-worker;
- 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.]”
From the above Rule 10A(i), it is clear that in respect of Job-work goods, when the same is sold by the principal manufacturer, the transaction value of the said goods sold by the principal manufacturer shall be adopted by the Job-worker for payment of Excise Duty.
- In view of the clear provision for valuation of Job-work goods, as provided in the above Rule 10A(i), there is no reason to add any other element in the transaction Therefore, we are of the view that the
demand in the present case is completely illegal and incorrect and without support of any law.
- Accordingly, we set aside the impugned order and allow the appeal.
(Pronounced in the open court on 11.08.2023)
RAMESH NAIR MEMBER (JUDICIAL)
C.L.MAHAR MEMBER (TECHNICAL)
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