TMI Blog2018 (7) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... ily on the grounds that supplies of raw materials that required to be approved by the latter, quality control exercised by Honeywell, 99% of the finished goods are sold to the latter and that Honeywell s brand name and MRP stickers are used on the packing. The Rule 10A has been inserted in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, w.e.f. 1.4.2007. As per this rule, the value at which principal manufacturer sells his goods will be the basis for determining the transaction value for payment of Central Excise duty by the job worker - Sujhan does not appear to qualify to be a job worker for the purpose of Rule 10A ibid. The inputs or goods are not supplied free by Honeywell, or other persons authorized by Honeywell. Just because the goods manufactured or produced by Sujhan are purchased by Honeywell on contract that should detract from acceptance of the transaction between Sujhan and Honeywell to be one of principal to principal basis. The arrangement between Sujhan and Honeywell, in our view, is on the lines of contract manufacturing as distinguished from job worker . The contract manufacturers are not supplied with the raw material from p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to sell the goods, the amount received by the asessee is only compensation of the expenditure incurred by the assessee and received by him through sale invoices raised. h) the declaration made in the MRP stickers as Specially manufactured for Honeywell Electrical Devices and Systems India Ltd. by M/s.Sujhan Instruments, 54, 4th Street, Kasi Estate, Jafferkhanpet, Chennai 600 083 also confirm that the goods are manufactured for M/s.Honeywell. Department took the view that Sujhan had simply been acting as job worker for Honeywell; that the entire manufacturing activities were controller by Honeywell as principal manufacturer; that Honeywell fixed ordinary sale price of the impugned goods; Hence value adopted for payment of duty by Sujhan is not the sole consideration for sale as per Section 4 (1) (a) of the Central Excise Act, 1944 Hence the goods required valuation as per Valuation (Determination of price of Excisable goods) Rules, 2000 under Section 4 (1) (b) of the Act. Various show cause notices were issued to the assessee for various periods inter alia demanding differential duty liability with interest thereon and also proposing imposition of penalties under various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner (Appeals), hence the appeal by Sujhan. 5. Today when the matter came up for hearing, on behalf of assessee, Ld. Advocate Joseph Prabhakar made various submissions which can be broadly summarized as under : i) In the first place, Ld. Advocate has sought to convey an objection in respect of the issues framed by the adjudicating authority. Towards this end, he takes us to para 11.1 of the order dt.3.9.2010 (Impugned order for Appeal E/810/2010 to point out that where the adjudicating authority had framed the issues as under : a) whether the activities of M/s.Sujhan Instruments are to be treated as those of a job worker on behalf of M/s.Honeywell i.e. job worker to principal or b) whether activities of M/s.Sujhan Instruments are to be treated as manufacture and relationship between M/s.Sujhan and M/s.Honeywell is on a principal to principal basis . ii) Ld. Advocate submits that the issue should have been framed in the other way round and that only after eliminating the applicability of Section 4 (1) (a) of the Act in respect of transactions between Sujhan and Honeywell, should the adjudicating authority have gone further ahead to agitate the applicability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 7. Heard both sides and have gone through the facts of these cases. 8.1 Ld. Advocate has found fault with the framing of issues by the Commissioner in the impugned order dt.3.9.2010 (impugned order for Appeal No.E/810/2010 E/1/2011) that the adjudicating authority should have examined the issue first under section 4 (1) (a) of the Act and not under Rule 10 (a) of the Valuation Rules. We are not able to appreciate this contention. For one thing, the related SCNs have alleged that the assessees having fallen out of the scope of Section 4 (1) (a) and hence would fall in Rule 10 (a) of the Valuation Rules. In fact, the major thrust of these notices is that Sujhan is nothing but a job worker for Honeywell and hence provisions of Rule 10 (a) are attracted. 8.2. Viewed in this light, the adjudicating authority has surely not committed sacrilege by seeking to examine the issue first through the scope of Rule 10 (a) ibid. It is alsonot as if the authority has refused or refrained from examining whether the relationship between Sujhan Honeywell is on principal to principal basis,since the second alternative issue framed in para 11.1 of that impugned order is just very that. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The contract manufacturers are not supplied with the raw material from principal manufacturers, like job workers , butthey are required to purchase them from the market, very often from vendors who are approved by the principal manufacturer for quality point of view. The principal then buys finished products from the contract margin and very often sales them to his core customer, sometimes with enhanced margin. Department has also not unearthed or brought out anything on record to suspect that the contract between Sujhan and Honeywell is only a camouflage for job working. There is also no evidence put forth to indicate that apart from the alue invoices by Sujhan to Honeywell there is an additional value component which is separately paid by the latter to the former or that there is any additional flow back of funds. This being the case, there is no reason on account of invoice value between Sujhan and Honeywell should not be treated as the transaction value under Section 4 (1) (a) of the Central Excise Act, 1944. 8.6 While arriving at this conclusion, we draw sustenance from the ratio of the Tribunal s decision in Coromandal Paints- 2010 (260) ELT 440 (Tri.- Bang.). In that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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