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2019 (8) TMI 956 - AT - Central ExciseValuation - related party transaction - job-work - processed fabrics was sold by the ‘job-worker’ to the principal manufacturer who, in certain cases, sold them to other buyers and, in certain other cases, retained them for manufacture of garments for which the processed fabrics were again sent to M/s Just Textiles Ltd. - deemed exercise of option - applicability of rule 9 of the Central Excise (Determination of Price of Excisable Goods) Rules 2000. HELD THAT:- There is no prescription of form for exercise of option which would create ‘said person’ for undertaking the discharge of duty liability. Moreover, deemed exercise of option cannot be a ground for procedural infringements. Having accepted the duty liability discharged by the ‘job-worker’, it is not open to the central excise authorities to take an entirely different stand to fasten liability for the same duty paid goods on the principal manufacturer. Under rule 12B of Central Excise Rules, 2002, the ‘said person’ can only be one or the other and, if the stand of the lower authority is accepted, there is an inherent contradiction in the demand; implied in the proposal for demand of differential duty is the acceptance of the validity of partial liability already discharged by the ‘job-worker’ with the principal manufacturer called upon to pay only that portion arising from application of the provisions in the rules of valuation pertaining to sale to unrelated person - In view of this contradictory stand adopted by the original authority, and sustained in the order of the first appellate authority, rule 12B of Central Excise Rules, 2002 has been completely and totally mis-interpreted - the deemed exercise of option is upheld and the duty liability limited to such as already been discharged by M/s Just Textiles Pvt Ltd. Valuation - goods cleared by M/s Just Export Pvt Ltd to M/s Just Textiles Ltd for further manufacturing - HELD THAT:- Once the duty liability has been discharged on the goods as a finished product and no new product comes into existence in the hands of M/s Just Exports Pvt Ltd, the transfer thereof to M/s Just Textiles Ltd for manufacture of other garments cannot be subject to duty liability under Central Excise Act, 1944. On the garments manufactured by the latter, there is no evidence that this has been done on ‘job-work’ basis - the scope for fastening duty liability on M/s Just Exports Pvt Ltd for such production effected by M/s Just Textiles Ltd does find the sanction of law. Appeal allowed - decided in favor of appellant.
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