TMI Blog2010 (10) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... not discuss as to how the goods, whose price has been adopted, are identical to the goods under assessment - There is also no discussion of the Appellant’s plea that the expenses incurred on freight & octroi are included in the cost of the raw materials - Therefore, in respect of this part of the duty demand, the matter has to be remanded to the Commissioner (Appeals) for de novo decision. Demand - Limitation - Suppression of facts - Apex Court in case of Pushpam Pharmaceuticals Company v. CCE, Bombay (1995 -TMI - 44049 - SUPREME COURT) has held that since the word, “suppression” in proviso to Section 11A(1) is accompanied by strong words as “fraud” or “collusion”, it has to be construed strictly, that mere omission to give correct information is not suppression of facts unless it was deliberate to evade the payment of duty - Thus, the impugned order does not discuss as to how the Appellant’s act or omission in this case constitutes “suppression of facts” - Demand set aside - 6070/2004-EX(BR) - 744/2010-EX(PB) - Dated:- 25-10-2010 - Justice R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ REPRESENTED BY : Shri Bipin Garg, Advocate, for the Appellant. Shri Amrish Jain, DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is required to be determined by the cost construction method, as neither the Appellant furnished the required information for determining the assessable value nor the price of comparable goods is available. According to Department, on this basis, in respect of their clearances of rods during Feb., 1996 to August, 1996 period, duty amounting to Rs. 65,072/- has been short paid. 1.4 In view of the above, a show cause notice dated 12-5-99 was issued to the Appellant for - (a) Recovery of allegedly short paid duty amounting to Rs. 2,08,068/- (Rs. 66,237/- + Rs. 76,739/- + Rs. 65,072/-) from the Appellant under proviso to Section 11A(1) of the Central Excise Act, 1944, along with interest on this duty under Section 11AB ibid; (b) imposition of penalty on the Appellant under Section 11AC of Central Excise Act, 1944 as well as Rule 173Q(1) of Central Excise Rules, 1944; and (c) imposition of penalty under Rule 209A on Shri Manmohan Lal, Ghai, Director of the Appellant-Company. 1.5 The show cause notice was adjudicated by the Deputy Commissioner vide Order-in-Original dated 20-12-99 by which the duty demand as raised in the show cause notice was confirmed along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Pawan Biscuits Co. (Pvt.) Ltd. v. CCE, Patna reported in 2000 (120) E.L.T. 24 (S.C.). (4) In respect of the rods manufactured on job-work basis for the traders dealing in agricultural implements, the duty is payable only on the cost of raw materials plus job-charges including Appellant s profit margin and, there is no basis for duty demand of Rs. 65,072/- in respect of these goods. (5) Judgments of the Tribunal in cases of Commissioner of Central Excise, Jaipur-II v. Modern Woollen Mills Ltd. reported in 2004 (165) E.L.T. 108 (Tribunal-Delhi) and Moti Biscuit Pvt. Ltd. v. CCE, Bolpur reported in 2003 (159) E.L.T. 1037 were cited wherein it was held that the assessable value of the goods manufactured on job work basis out of the raw materials supplied by the customers, is the cost of raw materials plus job charges including job worker s profit and the job work goods are not comparable with similar goods manufactured on his own account by the job-worker and as such, the provisions of Rule 6(b) of Central Excise (Valuation) Rules, 1975 are inapplicable for determining the value of the job work goods. (6) There is no suppression of facts, misstatement, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases, the Department seeks assessment of duty on the selling price of the goods charged by the merchant-manufacturers. This plea of the Department is incorrect as the merchant-manufacturers price would include their profit margin and expenses incurred by them, which is not includible in the assessable value in view of the Apex Court s judgment in case of Pawan Biscuits Co. (Pvt.) Ltd. v. CCE, Patna (supra), wherein it was held that in respect of the goods manufactured on job-work basis, the assessable value would be the cost of the raw material supplied plus job charges including job-worker s profit and the assessable value would not include the profit earned and the expenses incurred by the merchant-manufacturers. In view of this, the duty demand of Rs. 76,739/- is not sustainable and the same is liable to be set aside. 6. As regards the 1st component of duty demand of Rs. 66,237/- the same has been confirmed relying upon the comparable price of identical goods . According to Department, this method was adopted as the cost of freight and octroi paid for transportation of inputs received from certain customers and burning and cutting losses were not included in the assessabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard in the para-7 of the impugned order are as under :- 7. As for the remaining demand of Rs. 65092/-, I find that the same is based on cost construction method which is the appropriate way to work out the duty in absence of submission of information relating to various ingredients required for computation of assessable value by the appellants. 7.1 The above demand is in respect of rods manufactured for five merchant-manufacturers on job work basis out of the raw materials supplied by them. The Appellant pleaded that they had paid duty on the cost of raw materials plus job charges. The order does not discuss as to why the value has been determined by cost construction method. The Tribunal in case of CCE, Jaipur-II v. Modern Woollen Mills Ltd. reported in 2004 (165) E.L.T. 108 and Moti Biscuit Pvt. Ltd. v. CCE, Bolpur reported in 2003 (159) E.L.T. 1037 (Tribunal) has held that in respect of the goods manufactured on job work basis, the cost of raw materials plus job charges including job worker s profit is the correct assessable value and Rule 6(b)(i) and 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 are inapplicable. Therefore, the part of the impugned order co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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