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TMI Blog2014 (6) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... ing under Chapter Sub-heading No.87041010 on chassis sent free of cost by M/s. Tata Motors Pvt. Ltd. (here-in-after referred to as TML). 3. It is noticed that the Appellants manufacture the vehicles as per Purchase Order placed by TML. It is evident from the Purchase Orders 4550001493 dated 21.08.2007 (copy of the said Purchase Order is enclosed in Annexure:C to one of the show cause notices dated 12.11.2008 issued to M/s. Hyva India Pvt. Ltd and TML) that TML has placed the order on the Appellants under the Item Category, 'Sub-Contracting', for which Materials Net per Unit Rs.2,53,583/- were supplied by Tata Motors/TELCO. It is observed from the said Purchase Order that for CENVAT Set-Off of Rs.10,300/- paid as Additional Duty and Cess paid by TML on chassis (which is not payable on the vehicles manufactured by the Appellant, M/s. Hyva India) and accordingly, is deducted from the charges payable to the Appellants. Terms and conditions of the Purchase Order further provide that Manufacturing Process is required to be approved by Tata Motors and wherever necessary, Tata Motors Ltd. or their representative shall be afforded the right to verify at source that purchased product by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that when a fully body-built vehicle is supplied by a body-builder, to a chassis-supplier, there is a sale of body in this regard:- (i)Patnaik & Company Vs. State of Orissa 1965 (16) STC 364 (SC); (ii)Machenzies Ltd. Vs. State of Maharastra 1965 (16) STC 518 (SC); (iii)Commr. of Commercial Taxes Vs. M. G. Brothers 1975 (35) STC 24 (SC); (iv)Pothula Subba Rao Vs. State of A. P. 1972 (30) STC 69 (AP); (v)Jiwan Singh & Sons Vs. State of Punjab 1963 (14) STC 957 (P & H); (vi)Commissioner of Sales Tax Vs. Haji Abdul Majid & Sons 1963 (4) STC 435. He submitted that as the Appellants sold the body to TML for a price agreed between the assessees and TML, a completely/fully body-built motor vehicle was cleared by the Appellants and accordingly, the duty was being paid on the full value of the vehicle. He further submitted that the applicability of Rule 10A of Central Excise Valuation Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of W.O. Holdsworth & Ors. Vs. State of UP: 1957 (AIR) SC 887, had authoritatively held that the words, 'on behalf of' refer to an agent only. 9. He further submitted that Rule 10A does not employ the expressions, 'for' or 'on behalf of', unlike Business Auxiliary Service as amended by Finance Act, 2005, and submitted that the expression, 'on behalf of' is narrower than, and different from, the expressions, 'for' or 'on behalf of'. He relied upon the decision of the Tribunal as follows: (i) M/s Auto Coats Vs CCE & ST, Coimbatore 2009-TIOL-689-CESTAT-Madras; (ii) Sonic Watches Ltd. Vs. CCE,Vadodara 2010-TIOL-1518-CESTAT,Ahmedabad; (iii) M/s Marvito Engineering Industries vs.CCE, Vadadara 2012-TIOL-1070-CESTAT,Ahmedabad. The emphasis laid on these decisions is that the use of the expression, 'on behalf of', is attracted in case of a tripartite situation i.e., there should be three parties namely, Principal, Job Worker and Outsider, while as in the instant case, only two parties are involved. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 4 of the Central Excise Act, 1944 read with Rule 6 of the Central Excise Rules, 1944. The Tribunal held that as the transactions were on principal-to-principal basis and not 'on behalf of', therefore, Rule 10A of the Valuation Rules was not applicable. It is contended that Rule 10A should be read down to be applicable in the case of agency and not where the transaction is on principal-to-principal basis. 11. It is submitted that in their own case i.e. TELCO Vs. UOI reported in 1988 (35) ELT 617 (Pat), the Hon'ble High Court of Patna, held that the body builders, who build bodies on the chassis supplied by TELCO, are independent manufacturers, and it cannot be said that they manufacture bodies on behalf of TELCO. It is also submitted that the appeal filed by the Revenue in this particular case, was dismissed by the Hon'ble Supreme Court as reported in 1997 (94) ELT A128 (SC). 12. The ld. Sr. Advocate submitted that Rule 10A has been enacted pursuant to recommendation of the Expert Committee on the issue of job workers chaired by Dutta Majumder Committee. The Committee recognized the use of the expressions, 'for' or 'on behalf of'. Further, the Central Government confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is decision. He submitted that as in the present case, the Appellants used their own materials and machineries for manufacture of body on chassis, the work down by them cannot be characterized as job work, in light of the Apex Court's judgment of Prestige Engineering (supra). Therefore, it is the contention that determination of the value under Rule 10A of the Central Excise Valuation Rules, cannot be made applicable to facts and circumstances of this case and the value is to be determined under Rule 6 read with Section 4(1)(a) of Central Excise Act, 1944. 15. The ld. Sr. Advocate further pointed out that there were quantification errors in quantifying the demand in all the present Appeals, as the Adjudicating Commissioner had not deducted the sale tax amount from the value, while demanding duty from the Appellants. He further submitted that since the issue relates to interpretation of Valuation Rules, there cannot be any penalty in the present case. The ld. Advocate also submitted that in some of the cases, the extended period has been invoked for demanding the duty, although the facts were known to the Department. He has referred to a letter dated 26.04.2007 addressed to the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.Spl.Counsel further submitted that CESTAT, Mumbai in the case of HIPL Vs, CCE, Belapur(cited supra), had considered the Board's Circular and quoted extensively from the Co-ordinate Bench Order in the case of Audi Automobiles Vs. CCE, Indore vide 2010 (249) ELT 124 (Tri.-Del.), and after quoting Paragraphs 16, 17, 18, 19, 20 & 21 of the Co-ordinate Bench Order, explaining inter-alia, the expression, 'on behalf of' as distinct from the expression, 'for' and held that, neither the case laws cited by the Appellants nor Board's Circular (in the context of Service Tax Statute) was of any assistance to the Appellants. In both the cases, it was held that the value was to be determined under Rule 10A. It is their contention that this Rule nowhere refers to any third person as such, nor the expression in the manner it has been used, discloses any intention of the Legislature to the representation of any third party on behalf of the principal manufacturer. 19. To the objection of the ld. Senior Advocate that the copy of the 'Trust Receipts' were not supplied to the Appellants and therefore, the principle of natural justice was not followed, the Spl.Counsel contended that the 'Trust Receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of said goods from the factory of job-worker; (iii) in a case not covered under clause (i) or (ii), the provisions of foregoing rules, wherever applicable, shall mutatis mutandis apply for determination of the value of the excisable goods : Provided that the cost of transportation, if any, from the premises, wherefrom the goods are sold, to the place of delivery shall not be included in the value of excisable goods. Explanation. - For the purposes of this rule, job-worker means a person engaged in the manufacture or 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 authorised by him.] 23. Ongoing through Rule 10A, we find that this Rule provides the method of Valuation for determination of excise duty in respect of the goods manufactured on job work basis. For the purpose of Valuation Rules, job worker has been defined in the Explanation to Rule 10A. It is pointed out by the Revenue that the issue involved in the present Appeals, is identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' of the client. It was in a case of taxable activity falling within the category of 'business auxiliary service' while the 'client' is obliged to provide some service to a 3rd person but instead of the client providing such service, the service provider provides such service to the 3r person, on behalf of the client: i.e. 'acting as an agent of the client'. With this observation it was opined that it would not fall under business auxiliary service or any other existing taxable services. 18. Apparently, the Board's opinion was in relation to the service tax matter. It was in relation to the activity which was in question and to ascertain whether it would fall under the category of 'business auxiliary service' or not. In that regard, the expression 'provision of service on behalf of the client' and more particularly the term, 'on behalf of' was sought to be explained by the Board. The explanation in relation to such expression used in a provision in a particular taxing statute cannot be straightway applied to understand the meaning of the similar expression used in a different statute, more particularly ignoring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the contention on behalf of the said firms is that they are the sub-contractors in relation to the body building activity of the motor vehicle. The purchase order to which our attention was drawn, also refers to the expression sub-contracting. With reference to the same it was sought to be contended that there was a contract between the manufacturer of chassis and the said firms in relation to the manufacture of body building for the purpose of fabricating and mounting on the chassis manufactured by the chassis manufacturer. However, no copy of any such agreement has been placed on record nor it appears to have been made available to the Commissioner before passing the impugned order. The purchase order also refers to terms and conditions but it states that the same are printed overleaf. However, the copies of the purchase order placed on record do not disclose any of the terms and conditions having been printed on those purchase orders either on the front page or overleaf. Though we need not draw adverse inference for failure on the part of the appellants in this regard, yet it is not possible to ignore the same totally while dealing with the matter, as the issue involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity for the purpose of valuation would squarely fall under Rule 10A and not under Rule 6. We, therefore, do not find any illegality in the impugned order as far as the demand of duty and interest payable thereon from the appellants. 25. It is evident from the above quotation, that the reliance on the Circular issued by the CBEC in respect of the service tax matters and the reliance on the decision in Prestige Engineering India Ltd. (supra) were considered by the Tribunal in the case of Audi Automobiles (supra) and followed by the Tribunal in case of Hyva India Pvt. Ltd. (supra) and these submissions were not accepted by the Tribunal. 26. Ld. Senior Advocate for the Appellants also relied on the following decisions to prove his case that the body is sold, its sale as per Sale of Goods Act (i)Patnaik & Company Vs. State of Orissa 1965 (16) STC 364 (SC) ; (ii)Machenzies Ltd. Vs. State of Maharastra : 1965 (16) STC 518 (SC) ; (iii)Commr. of Commercial Taxes Vs. M. G. Brothers : 1975 (35) STC 24 (SC) ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the present Appeals. 28. The ld. Senior Advocate for the Appellants also relied on the Patna High Court's decision in case of Tata Engineering and Locomotive Co. Ltd., which was in respect of body builders. It is noticed that in the said case, show cause notices were issued demanding duty on the Principal, M/s. Tata Engineering and Locomotive Co. Ltd. and not from the body builders, while in the present case, the duty has been demanded from the Appellants and not from TML. Moreover, when the decision was passed, Rule 10A was not in existence. Therefore, we are of the view that the ratio of the said decision is not applicable to the present case. 29. The Appellants have further relied on the decision of the Tribunal in the case of CCE vs. Innocorp Ltd.(supra), which is in respect of interpretation of Rule 10A. It is the contention of the Appellants that according to the Tribunal, for applicability of Rule 10A, three requirements should be satisfied. Assessee should manufacture or produce goods; he should do it on behalf of the principal manufacturer and he should do it from any inputs or goods supplied by the principal manufacturer or by any other person. After going ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that it is not necessary that all the materials should be supplied and even if some of the materials are supplied, then in that case, it will satisfy the meaning of the expression, 'any' used in the Explanation to Rule 10A. 31. As regards the Appellants contention that they were not given a copy of the 'Trust Receipt' and in cases where the copy of the 'Trust Receipt' was provided, the said Receipt did not relate to the said case, we find that from this 'Trust Receipts', the ld. Commissioner in his Order observed that the Appellants held chassis in trust, supplied by entruster for the sole purpose of constructing body, to mount the same thereon and strictly returned the same (to RSO of TML) after mounting the body. The trust receipt denied the assessee the liberty to place or sell the same. We find that these Trust Receipts do not disclose any new evidence. Moreover, the Appellants do not dispute that as per Purchase Order placed to them by TML, the same Appellants were to fabricate and the body on the chassis supplied to them free of cost and returned the same after building the body to RSO of TML. However, as the copies of the Trust Receipts were not supplied to the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... di Automobiles and Hyva India Pvt. Ltd.(supra). 34. We find that in support of his arguments that duty is payable only on the job charges in these cases, the ld. Advocate has cited various case law in case of Atic Industries Ltd., Bombay Tyre International Ltd. and Ujagar Prints (supra), we find that these judgments relate to a period when Rule 10A was not existence and therefore, they are distinguishable from the facts of the present case. 35. We are, therefore, of the view that in the light of the decision of the Tribunal in Audi Automobiles & Others and M/s. Hyva (India) Pvt. Ltd. (cited supra) and the facts of the case discussed as above, the value of the goods supplied by the appellants, is to be determined under Rule 10A of the Central Excise Valuation, 2000 and not under Rule 6. We, therefore, do not find any infirmity in the impugned Orders-in-Original with regard to the valuation of the goods under Rule 10A of the Valuation Rules. 36. Ld. Advocate has referred to the Affidavits filed by the respective Appellants wherein they have challenged the computation of demand. In the said Affidavits, it has been stated that while computing the demand, the sale price of RSO had be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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