2004 (6) TMI 358 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalties for M/s. Vallabh Pesticides P. Ltd.
2. Valuation of pesticides manufactured as a job worker for United Phosphorous Ltd.

Analysis:
1. The judgment deals with the application for waiver of pre-deposit of duty and penalties amounting to Rs. 51,43,900.80 confirmed against M/s. Vallabh Pesticides P. Ltd. The duty was imposed under Section 11AC of the Central Excise Act, along with penalties under Rule 25 of the Central Excise Rules. The penalties also included amounts on the directors of the company. The demand of duty was confirmed by the Commissioner of Central Excise, Vadodara, based on the application of Rule 7 of the Valuation Rules. The contention of the job worker that their valuation method, based on the Ujagar Prints decision of the Supreme Court, was correct, was rejected. The Tribunal noted that the job worker was not conclusively determined to be an independent worker, and therefore, the method of valuation adopted by them was considered prima facie correct. As a result, the Tribunal waived the pre-deposit of duty and penalties, staying the recovery pending the appeals.

2. The second issue in the judgment pertains to the valuation of pesticides manufactured by M/s. Vallabh Pesticides P. Ltd. as a job worker for United Phosphorous Ltd. The Tribunal observed that the reasoning behind applying Rule 7 for valuation was the assumption that M/s. Vallabh Pesticides P. Ltd. were not independent job workers eligible for the Ujagar Prints formula. However, in the absence of a definitive finding that they were hired laborers and not independent job workers, the Tribunal found the method of valuation adopted by the company to be prima facie correct. Consequently, the Tribunal decided to waive the pre-deposit of duty and penalties and stayed the recovery pending the appeals.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai, involved issues related to the waiver of pre-deposit of duty and penalties for M/s. Vallabh Pesticides P. Ltd. and the valuation of pesticides manufactured as a job worker for United Phosphorous Ltd. The Tribunal found the method of valuation adopted by the company to be prima facie correct, leading to the waiver of pre-deposit and penalties pending the appeals.