2004 (8) TMI 610 - AT - Central Excise

Summary

Issues:
1. Valuation of goods for central excise duty purposes in job work scenario.

Analysis:
The case involved the respondents engaged in job work for converting raw material supplied by Steel Authority of India Limited into finished goods. The issue revolved around the valuation of these goods for central excise duty purposes. The Department contended that the prices claimed by the respondents were incorrect as they were job workers selling goods directly to consumers after paying duty, and no comparable goods were sold by SAIL at the factory gate. The Department issued show cause notices amounting to Rs. 35,91,315, which were adjudicated by the Assistant Commissioner resulting in a demand of Rs. 10,48,026 and a penalty of Rs. 1,00,000. The Commissioner (Appeals) set aside this order, leading to the Revenue's appeal.

The Tribunal, in a previous similar case, held that job workers are liable to pay central excise duty and that the assessable value of processed goods should include the value of raw material, conversion cost, and job worker's profit, not the merchant's profit. The Tribunal found that the assessable value adopted by the job workers was not undervalued, and there was no short levy of duty. The demands made by the Department were deemed unsustainable due to a misunderstanding of valuation principles laid down by the Supreme Court.

The only ground raised in the appeal was the Department's Reference Application to the Punjab and Haryana High Court against the Tribunal's order. Since the issue was covered by a previous decision that had not been stayed or overruled, the Tribunal upheld the impugned order and rejected the appeal. The decision was announced on 13-8-2004.