2004 (4) TMI 340 - AT - Central Excise

Summary

Issues: Valuation of fabrics stock transferred by appellant for further use in manufacture of sacks; Dispute over valuation method; Applicability of previous decision.

Valuation of fabrics stock transferred by appellant for further use in manufacture of sacks:
The appellants, engaged in manufacturing HDPE/PP fabrics and sacks, faced a dispute regarding the valuation of fabrics stock transferred to their godown for further use in sack production. The Revenue argued for valuing the fabrics based on the selling price of the sacks from the godown. However, a previous Final Order clarified that even if the conversion of fabric into sacks involved a manufacturing process, the job-worker was the one carrying out the manufacturing process. Thus, the demand raised against the appellant was deemed unsustainable. Consequently, the order impugned was set aside, and the appeal was allowed.

Dispute over valuation method:
The core issue in this case revolved around the method of valuing fabrics stock transferred by the appellants for the production of sacks. The Revenue insisted on valuing the fabrics based on the selling price of the sacks from the godown. However, the Tribunal's decision highlighted that the job-worker, not the appellants, was engaged in the manufacturing process of converting fabrics into sacks. This distinction was crucial in determining the appropriate valuation method. As a result, the demand raised against the appellant was deemed unjustified, leading to the setting aside of the impugned order and the allowance of the appeal.

Applicability of previous decision:
The Tribunal noted that the issue raised in the current appeal was akin to the one addressed in a previous Final Order. The earlier decision clarified that the job-worker involved in converting fabrics into sacks was the one conducting the manufacturing process, not the appellants. This precedent played a pivotal role in the current judgment, as it established a consistent stance on the matter. By invoking the principles outlined in the previous decision, the Tribunal was able to resolve the dispute and rule in favor of the appellant, ultimately setting aside the impugned order and allowing the appeal to proceed without the need for pre-deposit.