TMI Blog2009 (5) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... the chassis by the automobile chassis manufacturers and undertake the fabrication and mounting activity. The said firms pay the duty as per the provisions of Rule 11(8) of the said Rules, worked out on the basis of fabrication and mounting on the chassis supplied free of cost by the manufacturer of chassis. Show Cause Notice issued on the grounds that the vehicle were being manufactured by the same firms on job work basis and as soon as the excisable goods were cleared from their premises as the vehicles, the same are to be assessed in terms of Rule 10A of the said Rules. Held that- In the facts and circumstances of the case, it is apparent that the said firms had cleared the goods in relation to the body fabricating and mounting on the chassis which were supplied to the said firms free of cost by the manufacturer of chassis. Being so, the activity for the purpose of valuation would squarely fall under Rule 10A and not under Rule 6, therefore, do not find any illegality in the impugned order as far as the demand of duty and interest payable thereon from the appellants. But no penalty can be imposed. The appeals partly succeed. - E/94-99, 103-104 and 157/2009 - 478-486/2009-EX(PB) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of body on the chassis to the manufacturer of chassis by the said firms is under invoices issued by the said firms. 5. The dispute in the present matters relate to the assessable value of the goods cleared in the above manner by the said firms from their factory. The said firms cleared the goods as motor vehicles classifying the same under Chapter 87 of the Schedule to the Central Excise Tariff Act, 1985 by paying self assessment duty as provided in Rules 8 and 6 of the said Rules. As noted above the manufacturers of automobile chassis supplied the chassis of the vehicle manufactured in their factory to the said firms after payment of duty and the said firms availed CENVAT credit duty paid on those chassis treating them as input, as also on other raw materials purchased by them and used as the inputs for the purpose of the work of fabrication and mounting of body on the chassis. 6. Show cause notices came to be issued to the appellants on the ground that the vehicles were being manufactured by the said firms on job work basis and as soon as the excisable goods were cleared from their premises as the vehicles, the same are to be assessed in terms of Rule 10A of the said R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms would not be a job work as Rule 10A clearly requires such activity to be on behalf of the principal manufacturer for the benefit of the third party. According to learned Counsel, for the purpose of the applicability of Rule 10A, it has to satisfy that the work is not only on behalf of the principal manufacturer but it has to be for the benefit of the third party. He further submitted that the person carrying out the manufacturing activity on job work obviously represents to the third party on behalf of the principal in relation to the activity carried out by him. Rule 10A according to learned Counsel does not speak of job work for the principal but on behalf of the principal whereas it has been the case of the Department that the activity of the said firms is for the principal. In this regard, the understanding of the Board about the expression "on behalf" was also brought out to notice in the form of Board's Circular dated 18-7-2007. He submitted that though the circular was in different context, it discloses the understanding of the Board in relation to such expression and applying the same to Rule 10A it would be clear that the intention of legislature in incorporating Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the same, he submitted that the goods manufactured by the said firms clearly amount to manufacture of the products which have been entrusted to the manufacturer for completion of the manufacture of motor vehicle and therefore it squarely falls within the description of job work. It was also submitted that all the assessees were not following same practice in relation to the discharge of their duty liability and some assessee were applying the provisions of Rule 10A whereas some others Rule 6. 10. Upon hearing the learned Senior Advocate and learned DR, and on perusal of the materials produced before us, the dispute essentially relates to the controversy pertaining to the assessable value of the goods cleared by the said firms pursuant to the chassis supplied to them free of cost by the manufacturer of the chassis. The contention about non-applicability of Rule 10A is based primarily on the ground that the activity by the assessee is not in the nature of job work and secondly in any case, the activity is not on behalf of the principal manufacturer. 11. Rule 10A provides that where the excisable goods are produced or manufactured by a job worker, on behalf of a person (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the manufacture by a job worker for the purpose of the said rule. 13. If one peruses the decision of the Apex Court in Prestige Engineering (India) Ltd. (supra) it is apparent that the same was relating to the exemption Notification No. 119/75-C.E., dated 30-4-75. The said notification read as under:- "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), manufactured in a factory as a job work from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the amount charged for the job work. Explanation.- For the purposes of this notification, the expression 'job work' shall mean such items of work where an article intended to undergo manufacturing process is supplied to the job worker and that article is returned by the job worker to the supplier, after the article has undergone the intended manufacturing process, on charging only for the job work done by him". 14. Referring to the said notification, the Apex Court held that "we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turers undertaking job works. In other words, the Apex Court accepted the meaning of the job work bearing in mind the context in which the expression was found to have been used in the said notification No. 119/75. It is true that the Apex Court has also observed that the idea behind the notification was to help the job workers who had contributed mainly their labour and skill, though the implementation of works was with the help of tools, gadgets or machinery. Apparently, the entire discussion was with reference to the context in which the said expression was found to have been used in the said notification. It was specifically observed in the said decision that the notification was not intended to benefit those who had contributed their own material to the articles supplier by the supplier and manufactured a different products. 16. Considering the facts of the said case and the context in which the expression 'job work', had been understood and explained by the Apex Court in Prestige Engineering (India) Ltd., it cannot be said that the Apex Court has ruled that the expression 'job work', in every provision of law is to be understood irrespective of the context in which the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing to do with the representation to any third party on behalf of the principal manufacturer. The said expression has been used to refer to the job work and vis-a-vis the principal manufacturer in respect of such job work. In this context, it would also be worthwhile to take note of the definition of the term 'manufacture' and "manufacturer" found in Section 2(f) of the said Act. Considering the same, it is evident that the expression "on behalf of" used in Rule 10A denotes the manufacturer of the excisable goods. The said expression cannot be understood in a manner sought to be argued on behalf of the appellants that it would refer to representation to the third party on behalf of the principal manufacturer in relation to the product manufactured. This is further clear from the explanation to Rule 10A. The explanation clearly states that the person engaged in the manufacture of production of goods on behalf of a principal manufacturer, from any inputs or goods supplied by the said principal manufacturer or by any other person authorized by him would be a job worker. In other words, the person who manufactures or produces the goods for or on behalf of the principal manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer of chassis, it was required for them to establish the same with cogent materials. The records nowhere disclose any justification for non-production of the said documents i.e. the contract and terms and conditions in relation to the purchase order. It is however clarified by the learned Counsel for the appellants that the appellants had not specifically raised before the original authority the point about the said firms being sub-contractors and therefore had no occasion to produce the said documents and the arguments by the appellants in relation to this point are in an answer to what has been submitted on behalf of the department and in that context it is contended that the work by the said firms was in the nature of sub-contract. Therefore, the appellants cannot be accused of any suppression of documents. As already observed, we are not drawing any adverse inference for non-production of the documents. We have only observed that once it is sought to be contended that Rule 10A will have no application in the facts of the case, it was for the appellants to produce relevant documents like the invoice and agreement which would support the case putforth by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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