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Bijal Packaging and Ors. Vs. C.C.E. & S.T., Ahmedabad - (Customs, Excise and Service Tax Appellate Tribunal) (02 Jan 2019)

Excise duty liability should be computed considering sale value charged to independent customers as assessable value for purpose of valuation of job worked goods



The Appellant Bijal Packaging and B.B. containers both are situated at one factory premises were engaged in the manufacture of metal tin container. 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 01st March, 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.

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.

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., 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 no need to resort to Section 4(1)(B) and Valuation Rules, 2000. In view of the Larger Bench judgment, 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.

As regard, the admissibility of the Cenvat Credit, 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. 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 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.

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. In view of 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 by way of remand to the adjudicating authority.


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