TMI Blog2010 (9) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent. [Order per : B.S.V. Murthy, Member (T)]. M/s. Shri Hari Textiles Pvt. Limited (Shri Hari for short) is engaged in the manufacture of Polyester Texturised Yarn (PTY) and grey fabrics. After the visit to the factory premises of Shri Hari on 19/20-02-2005 and after further investigations, a show cause notice was issued proposing to recover Central Excise duty on PTY manufactured by the appellants on job work basis and cleared to M/s. Rapier Machinery Manufacturing Company (India) Pvt. Limited (Rapier for short) amounting to Rs. 46,28,786/- for the clearances for the period 09-7-2004 to 23-11-2004. Show cause notice also proposed to recover Central Excise duty amounting to Rs. 30,39,016/- + education cess on the ground that Shri Hari had cleared 1,54,583 Kgs of PTY by issuing parallel invoices. Further differential duty of Rs. 2,57,318/- + education cess was demanded on the ground that the value had not been worked out correctly in respect of the goods manufactured on job work basis. Commissioner has passed impugned order whereby duty demand in respect of clearances of PTY for the period 9-7-2004 to 23-11-2004 against Shri Hari was confirmed. Further differential du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ftware Technology Parks or for supply to the United Nations or an international organization for their official use or for supply to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) Notification No. 108/95-C.E., dated the 28th August, 1995, or (iii) for removal under bond for export, or (iv) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or (b) cleared as such from the factory of the supplier of raw materials or semi-finished goods - (i) on payment of duty for home consumption (on which duty of excise is leviable whether in whole or in part); or (ii) without payment of duty under bond for export; or (iia) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or (iii) without payment of duty to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid process. Description of inputs Description of final products (1) (2) All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than polyester filament yarn falling under heading 5402 and tariff item 54060010 [OLD - 54061000] [OLD- heading No. 54.02], light diesel oil [OLD - light diesel oil], high speed diesel oil and motor spirit, commonly known as petrol All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). (II) Notification No. 26/2004-Central Excise dated 9-7-2006 : In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86-Central Excise, dated the 25th March, 1986, and published in the Gazette of India vide n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(5)(a) of Central Excise Rules, 2004 and the decision of the Tribunal in the case of Trico Processors Limited - 2005 (189) E.L.T. 126, it was held that whereas inputs are returned to the principal manufacturer after completion of job work, the duty demand cannot be sustained against the job worker. It was also held that confirmation of demand of duty in the hands of job worker cannot be sustained, even if the said process amounts to manufacture. (b) In the case of Akash Fashion Prints (P) Limited - 2009 (245) E.L.T. 871 (Tri. - Ahmd.), the Tribunal noted the arguments advanced by the learned advocate on behalf of the appellants as under :- 2. Learned advocate on behalf of the appellant submitted that the issue of eligibility for the benefit of manufacture on job work basis in respect of product excluded from Notification No. 214/86, is no longer res integra. It has been held in several decisions of the Tribunal that if the goods have been processed by following the provisions of Rule 57F(4)/57AC of CER, 1944 or Rule 4(5) of CER, 2004, duty cannot be demanded from the job worker. The provision of the law requires that the inputs after processing are returned back within stipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workers cannot be sustained. 6. The Commissioner has also confirmed duty demand of Rs. 2,57,318/- and education cess of Rs. 5,055/- on the ground that notional profit has to be added to arrive at the assessable value for assessment for the goods cleared for job works. Para 27.1 of the order is reproduced :- 27.1 In this regard, the allegation made in the show cause notice was that M/s. Shri Hari has manufactured and cleared polyester Texturised yarn classifiable under Chapter heading No. 54.02 to their sister concern i.e. M/s. Rapier on job work basis, during the period from 24-11-2004 to 19-2-2005 on payment of duty as per Section 4 of the Central Excise Act, 1944. The said goods received by M/s. Rapier Machinery was used to manufacture its finished goods i.e. mixed grey fabrics/knitting fabrics and hence it is to be treated as captive consumption by their sister concern in light of Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Therefore, the valuation of the said goods was to be done in terms of Rule 9 read with Rule 8 of Central Excise Valuation Rules, 2000. The show cause notice sought for demand of differential duty amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. It is a settled law that even if job work is done for related person, provision in respect of related person should not apply as there is no sale through related person, as held in the case of Praful Industries v. CCE - 2000 (118) E.L.T. 97 (CEGAT), followed in case of Special Prints v. CCE - 2003 (156) E.L.T. 1010 (CESTAT). In case of J. Ice Creams v. CCE - 2000 (121) E.L.T. 89 (CEGAT), it was held that when job work is done for a related person, valuation will be on the basis of job work charges plus material cost. In this case it was a submission that transaction was on principal-to-principal basis and there was no mutual interest and interest was only to the extent of job work and labour charges which included their profit. The alternative submission made was that even if job work was done for the related person, notional profit could not be added. Further, they stated that Rapier was their sister concern and there is no specific allegation in the show cause notice that both were related persons and therefore, the value is required to be revised. In the show cause notice it was simply stated that the goods were to be treated as captively consumed by their sister conc ..... 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