TMI Blog2013 (6) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... in favor of assessee. - E/88/2004 - 153/2012 - Dated:- 6-3-2012 - Mr. P.G. Chacko and Mr. M. Veeraiyan, JJ. For the Appellant: Mr. Ganesh Haavanur, Addl. Commissioner For the Respondent: Mr. S.K. Choudhary, Consultant JUDGEMENT Per: P.G. Chacko This appeal of the Department is directed mainly against the dropping of demand of differential duty of Rs.4,47,520/- ordered by the Commissioner(Appeals) in favour of the assessee(respondent). The facts of the case are as follows: the respondent was engaged in the manufacture of P or P medicaments of Chapter 30 of the 1st Schedule to the Central Excise Tariff Act, 1985. During the period 1999-2000 to 2000-2001, they manufactured certain medicaments on job work basis for M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11AC of the Central Excise Act besides another penalty of Rs.20,000/- on them under Rule 27 of the Central Excise Rules, 2001. Aggrieved, the assessee(respondent) preferred an appeal to the Commissioner(Appeals). The appellate authority accepted the assessees contention that neither of the above charges was a part of either raw material cost or conversion cost. As neither of the charges was attributable to the job work carried out by the assessee, the Order-in-Original was set aside and the appeal was allowed. The present appeal of the Revenue is against the decision of the learned Commissioner(Appeals). 2. Heard both sides. The learned Additional Commissioner (AR) reiterated the grounds of the appeal. He submitted that the amounts c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bit note provided the break-up of amounts debited to the account of the raw material supplier in relation to numerous medicaments specified in the debit note. The learned consultant submitted that, as a matter of fact, some of these medicaments were not manufactured and supplied to M/s. SLL, but the Department did not even care to amortize the product development charges before inclusion thereof in the assessable value of the job-worked medicaments. In this context, reference was made to Kirloskar Ferrous Industries Ltd. vs. CCE, Belgaum [2005(189) ELT 474 (Tri. Bang.)] wherein this Bench held that certain charges collected by the assessee for development of patterns of casting had to be amortized per unit of casting on its expected life. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Appeals) also clearly found that the assessee had taken into consideration the cost of raw materials + packing charges + conversion charges for valuation of the goods. He further noted that the conversion charges included the element of profit. These findings have not been challenged in the present appeal. Apparently, the appellant has broadly accepted the fact that the respondent applied Ujagar Prints formula to determine the assessable value of the goods. The area of dispute is narrow. According to the appellant, the so-called product development charges and consultancy charges should also be included in conversion charges so as to be part of the assessable value of the goods. The respondent is opposed to this view. The view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdless of the fact that only some of the medicaments specified in the debit note were supplied by the job worker, would ipso facto indicate the fallacy of the Department s claim that the product development charges covered by the debit note are to be treated as part of the cost of conversion. 4. Apart from the above, there is no denial of the fact that the respondent has been paying service tax on product development charges in view of an audit objection dt. 09/09/2004. Therefore, the contention raised by the learned consultant that the same charges cannot be subjected to levy of Central Excise duty is also acceptable. 5. Thus, on merits, the respondent has made out a formidable case and therefore the Departments appeal is bound to fai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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