Raju ORDER
Ramesh Nair, Member (J)
1. The appellant M/s. Bijal Packaging and M/s. B.B. containers both are situated at one factory premises at Plot No. 227/C, Dantali Industrial Estate, Gota-Vadsar Road, Dantali, Tal.-Kalol, Dist. Gandhi Nagar, were engaged in the manufacture of metal tin container falling under Chapter Heading No. 7310 2110 of First Schedule to Central Excise Tariff Act, 1985. They were manufacturing Metal Steel Container on their own as well as on job work basis and splitting up the clearances availing the exemption from payment of central excise duty under Notification No. 08/2003-CE : MANU/EXCT/0060/2003 dated 01.03.2003 as amended. On a search and further investigation, it was found that the assessees were engaged in manufacture of metal tin container without obtaining central excise registration. For manufacture of tin container. One another unit M/s. Shriji Packaging which is also located in the same premise, purchased tin plates from manufacturer like SAIL and sold the same on resale basis to the owner of oil mills. These oil mills owners than sent the tin plates for converting into metal tin container on job work basis to M/s. Bijal Packaging and M/s. B.B. Containers. On inquiry it was found that the edible oil manufacturer for whom the metal tin container were manufactured on job work basis revealed that metal tin container purchased from the said unit used to have their logo and name duly embossed; that till edible oil was dutiable, they used to avail job work procedure; that in some cases they out rightly purchased metal tin container from the unit and that the same were not job work; that in some cases the metal tin plates were transferred to the said unit for conversion into container on job work basis, that in some cases they showed purchase of tin plates from M/s. Shriji Packaging and then transferred it to M/s. Bijal Packaging for conversion into container. After detailed investigation, SCN was issued to the appellants which culminated into adjudication order whereby the demand of central excise duty, interest and imposition of penalty were confirmed, therefore, the present appeals.
2. Sh. S.J. Vyas Ld. Counsel appearing on behalf of the appellant submits that as regard clubbing of sales turnover of all the units in a financial year, the appellant do not contest the said clubbing. He fairly concedes that as per Notification No. 08/2003-CE : MANU/EXCT/0060/2003, the clearances by one or more manufacturer from one factory, the exemption shall apply to the total value of clearance of all the manufacturer manufactured the goods in a factory shall be considered for the aggregated value. Therefore, he do not contest the demand on the ground of eligibility of SSI exemption Notification No. 08/2003-CE. : MANU/EXCT/0060/2003 He further submits that as regard the demand of duty on job work basis, the adjudicating authority has considered the value as per M/s. Ujagar Prints case i.e. raw material cost + job charges. He submits that the same goods were sold by the appellant to various buyers, therefore, the sale price of the same goods was available, in such case as per the judgment of Larger Bench of this Tribunal in the case of M/s. Ispat Industries 2007 (2) TMI (5) (Tri.LB), when the sale price of same goods is available which is manufactured on job work basis, the sale price will apply instead of the value adopted in principle of M/s. Ujagar Prints. He submits that in that case when sale price of the goods sold to the buyers is applied, the differential duty would stand reduced substantially. He further submits that once the sale value is applied, the deduction permissible under Section 4 shall also be applied. In the present case. The deduction amount of transport cost is permissible, the same is also to be considered while calculating the actual duty liability. He further submits that the adjudicating authority has denied the cenvat credit on the ground that the invoices were issued by M/s. Shriji Packaging to the principal manufacturer, therefore, on the invoice the appellant name is not appearing. He submits that the department has calculated the cost of raw material from the same invoice considering that the goods of the invoice issued by M/s. Shriji Packaging was used by the appellant. If this be so then merely because the name of the appellant is not appearing in the invoice cenvat credit cannot be denied. He also submits that while calculating the cost, the wastage was also not considered. As regard, limitation he submits that since one unit was registered in the same premise, it cannot be said that there is suppression of fact on the part of appellant, therefore, the demand for extended period is not sustainable. He submits that lower authority has relied upon the decision of M/s. Loharu steel Industries MANU/CB/0003/2002 : 2002 (141) ELT 229 (Tri.Bang.) wherein it was held that the value of job worked goods should be done on the principle laid down in the case of M/s. Ujagar Prints. He submits that firstly, in this case, the period is prior to introduction of Central Excise Valuation Rules, 2000. Secondly, the judgment of Larger Bench in the case of M/s. Ispat Industries was not before the Division Bench of this Tribunal, therefore this judgment is not applicable.
3. Sh. S.K. Shukla Ld. Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. On careful consideration of the submissions made by both the sides and perusal of the records, we find that the appellant are engaged in the manufacture of tin containers for edible oil manufacturing company. The said tin containers were manufactured on job work basis as well as the same containers were sold on principal to principal basis. In this fact as per the Larger Bench judgment of the Tribunal in the case of M/s. Ispat Industries Ltd. (Supra), the sale price charged to the independent buyers shall apply even in case of job work. In the said judgment it is observed that once the value under Section 4 i.e. transaction value is available then there is not need to resort to Section 4(1)(B) and Valuation Rules, 2000. In view of the Larger Bench judgment, we are of the considered view that the excise duty liability should be computed considering the sale value charged to the independent customers as the assessable value for the purpose of valuation of job worked goods. Since, the said value is in accordance with Section 4, the permissible deduction such as transportation is also available to the appellant. We agree with the Ld. Counsel's submission that the judgment in the case of M/s. Loharu Steel Industries Ltd. of this Tribunal is not applicable, in the facts and the circumstances of the present case for the reason that firstly that judgment is for the period prior to introduction of new section 4 and Valuation Rules, 2000. Secondly, the judgment has not considered the Larger Bench judgment of this tribunal in the case of M/s. Ispat Industries Ltd. (Supra). As regard, the admissibility of the Cenvat Credit, we find that there is no dispute that the invoices on which the appellant seeking availment of Cenvat Credit, the goods of the said invoices were admittedly used by the appellant for job work. The same has been endorsed by the department by taking cost of raw material from the same invoices. In this position merely because the name of the appellant is not appearing on the invoices, Cenvat Credit cannot be denied. In any case when the job worker manufactured the goods out of raw material belongs to the principal, the purchase invoices will obviously be in the name of principal and not in the name of job worker, however the fact remains that the said duty paid goods were used by the appellant in the manufacture of job worked goods, therefore, credit is clearly admissible on such invoices of tin plate to the appellant.
5. As per our above discussion we hold that the valuation of job worked goods computed by the department on the basis of cost of raw material + job work charges is incorrect. Therefore, the adjudicating authority must re-quantify the duty on the value arriving on the basis of sale price of tin container applied to the independent buyer. The appellant is also entitled for deduction of transportation in accordance with law. The appellant is also entitled for the Cenvat Credit on the raw material i.e. tin plates on the invoices though not in their name. Considering all these aspects, demand may be re-quantified. Considering the facts and the circumstances, of the case and the issue involved is interpretation is of SSI exemption Notification No. 8/2003-CE : MANU/EXCT/0060/2003 and valuation provision the mala fide intention cannot be attributed to the appellant, therefore, penalties imposed by the adjudicating authority are set aside. The appeals are partly allowed in above terms by way of remand to the adjudicating authority.
(Pronounced in the open court on 02.01.2019)
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