TMI Blog1993 (3) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... d (HPCL) from the steel sheets/coils supplied by them. The assessable value of these steel drums were determined on the basis of the declared cost of the steel sheets and the appellants fabrication charges, as per Chartered Accountant s certificates, filed from time to time. HPCL used these drums for packing of their asphalt bitumen. 3. A Show Cause Notice was issued to the party asking them to show cause as to why the assessable value of the steel drums manufactured by them for HPCL should not be revised after adding HPCL s notional profit margin of 10%. The Show Cause Notice was also issued as to why the transportation charges and the cost of wrapping material should also not be added to the cost as per Chartered Accountant s Certificate. Transportation charges were incurred on account of transport of steel sheets from railway siding to the factory of the appellants, and were borne by the appellants. The wrapping material was received by the appellants along with the steel sheets/sheet coils, and no separate cost of these wrapping materials was shown, and its cost was already included in the cost of steel sheets/steel coils. 4. The Assistant Collector, Central Excise, Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, 1992 (61) E.L.T. 242 (Guj.); (4) Collector of Central Excise, Vadodara v. N.J. Metal Screens Manufacturing Company Ltd., 1991 (37) ECR 655 (CEGAT). 9. The learned Advocate also referred to the Tribunal decision in Appeal Nos. 17/79-A and 58/80-A, dated 14-9-1985 relating to Standard Drum and Barrel Manufacturing Company, Bombay v. Collector, Central Excise, Bombay, in which a similar question has been decided, by the Tribunal. 10. Smt. C.G. Lal, learned SDR, mentioned that there was no statutory fixation of price and that 10% profit was reasonable. She referred to the following citations in support of her arguments :- (1) Union of India v. Bombay Tyre International - 1983 (14) E.L.T. 1896 (S.C.) Para 33; (2) Food Specialities Ltd. v. Appellate Collector, Central Excise and Customs, New Delhi - 1988 (33) E.L.T. 331 (P H); (3) Pawan Biscuit Company Pvt. Ltd. v. Collector, Central Excise, Patna - 1991 (53) E.L.T. 595 (T) = 1991 (37) ECR page 315 (CEGAT) Special Bench A ; (4) Appolo Zipper Company Pvt. Ltd. v. Collector, Central Excise, Calcutta, 1987 (29) E.L.T. 126 (Tribunal). 11. We have carefully gone through the submissions made on bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her things, to any one or more of the methods provided for in those rules. 16. The appellants were having a Central Excise L4 Licence No. 87/Metal/70. The steel drums were manufactured by them out of steel coils supplied to them by their customer-HPCL. Such steel drums were used by HPCL for packing of their product-asphalt bitumen. These drums were not sold as such by the HPCL. As the steel sheets/coils were supplied free of cost by HPCL, under an agreement, fabrication charges were paid by HPCL to the appellants. The steel sheets/coils were lifted by the appellants from the railway siding and transported to their factory. These transportation charges were not billed separately by the appellants to HPCL, but these charges were included in their fabrication charges payable by HPCL to the appellants, as per agreement. The steel sheets/coils were received wrapped in wrapping material. The cost of this wrapping material was included in the value of steel sheets/coils. 17. The assessments were made on the basis of a Chartered Accountant s Certificate. The Chartered Accountant s certificate showed cost of the drums and their fabrication charges separately. Different costs were shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited purpose such supply of steel drums to HPCL, the customers, could be considered as a deemed sale as observed by the Hon ble Supreme Court in the case of Ujagar Prints v. Union of India - 1989 (39) E.L.T. 493 (S.C.). In the context of processing of fabrics on job work basis for the customers (traders) by the processors the Hon ble Supreme Court observed that the assessable value of the processed fabric would be the value of the grey cloth in the hands of the processor plus the value of the job work done plus manufacturing profit and manufacturing expenses whatever these may be, which will either be included in the price at the factory gate or deemed to be the price at the factory gate for the processed fabrics. The factory gate here means the deemed factory gate as if the processed fabric was sold by the processor. 27. In the cost data certified by the Chartered Accountant there is nothing to show that the value of the job work done plus the manufacturing profit and the manufacturing expenses have not been taken into account. In fact, the party has specifically stated that the manufacturer s profit margin has already been included in the cost of the drums as certifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lector, Central Excise, Madras v. Modoplast (P) Ltd., Coimbatore, 1985 (21) E.L.T. 187 (Tribunal); and (2) Metal Box India Ltd., Calcutta v. Collector, Central Excise, Calcutta, 1986 (23) E.L.T. 187 (Tribunal), the Tribunal held that the goods manufactured out of customer s raw materials cannot be said to have been manufactured on behalf of the customer when the licence for manufacture was taken by actual manufacturer and other statutory requirements for manufacture were complied with by actual manufacturer, when dealings are on principal to principal basis and manufacturing unit was not a nominee or facade for supplier of raw material. 34. In the case of B.S. Rajasekhar v. Collector, Central Excise, 1993 (63) E.L.T. 369 (Tribunal), the point to be considered was whether mere supply of raw material to other units for the manufacture of the goods will make the raw material supplier as manufacturer. The Tribunal has held that mere supplying the raw materials to other manufacturing unit or units for the manufacture of the goods will not make the raw material supplier as manufacturer if dealings are on principal to principal basis and the units are no fake or dummy. 35. Thus, we do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (14) E.L.T. 1896 (S.C.), that it was not possible to conceive of the price under Section 4(1)(a) being confined to the manufacturing cost and the manufacturing profit and that it was not possible to limit the price to its components representing the manufacturing cost and manufacturing profit 40. In the case before us the assessments were for the period 1-10-1978 to 31-3-1979 and were done on the basis of the Chartered Accountant s certificate dated 27-7-1979 under the provisions of Rule 9B of the Rules. The assessable values were arrived at under the Valuation Rules, 1975. The differential duty demanded on the basis of Chartered Accountant s certificate dated 20-2-1980 for the subsequent period 1-4-1979 to 30-9-1979 was paid by the party. 41. The prices declared were not under the main definition case under Section 4(1)(a) of the Act, and hence the above observations of the Hon ble Supreme Court were not applicable to the facts before us. 42. The Punjab and Haryana High Court decision in the case of Food Specialities Ltd. v. Appellate Collector, Central Excise and Customs, New Delhi - 1988 (33) E.L.T. 331 (P H) relied upon by the respondent related to the captive consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that case, the Tribunal had come to a finding that the relationship between the Pawan Biscuit Company and BIL was that of Agent and Principal. They had held that the normal price under Section 4(1)(a) of the Act was not ascertainable on the facts of the case and that the assessable value should be determined on the basis of the comparable sale namely the price at which the BIL were selling the biscuits in the wholesale market. 45. In the case before us, the steel drums were used by HPCL for packing asphalt bitumen. These drums were not sold as such by the customer (HPCL). There is no finding that the appellants before us were Agents of HPCL in the sense in the case of Pawan Biscuits, the Pawan Biscuit Company were Agents of the BIL. We do not find that HPCL exercised any control or supervision or issued any direction with regard to manufacturing of steel drums by the party in the way BIL exercised control or supervision or issued directions with regard to the manufacturing of their branded biscuits by the Pawan Biscuit Company. 46. Further, in the Pawan Biscuits case before the Tribunal, BIL were also independent manufacturers of biscuits having their own factory and possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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