Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2018 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 420 - AT - Central ExciseValuation - job-worker or not? - appellant entered into agreement with M/s.Honeywell Electrical Devices and Systems India Ltd. on manufacture on contract basis - 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 - 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’? Held that:- A perusal of the SCN No. 104/2009 dt. 23.10.2009 reveals that department is inclined to treat Sujhan as a job worker of Honeywell primarily 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 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 - 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. We draw sustenance from the ratio of the Tribunal’s decision in Coromandal Paints [2010 (9) TMI 315 - CESTAT, BANGALORE], where it was held that by merely indicating vendors of raw materials or by giving advance for procuring raw material or even installing equipment given by SIPL would not render Coromandal as a job worker. Appeal allowed.
|