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M/s M.G. Automotives (P) Ltd. Versus CCE, Hyderabad-I

2016 (9) TMI 936 - CESTAT HYDERABAD

Job-work - valuation - activity of building body at their factory on the duty paid motor vehicles' chassis supplied to them - appellants were acting as job worker to MIL - Held that:- the value of the goods supplied by the appellants is to be determined under Rule 10A of the Central Excise Valuation Rules, 2000 and not under Rule 6. - The identical issue involved in these appeals has already been analysed at length in the various judgments of Tribunal upholding the stand of the department, a .....

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cipline and judicial propriety requires us to follow and apply the ratio of the judgments cited supra especially when it is not the case of appellant that the same has not been stayed or overturned by higher courts. - Decided against the appellant - E/777 & 778/2008, 624 & 625/2009 - Final Order No. A/30643 to 30646/2016 - Dated:- 8-8-2016 - Ms. Sulekha Beevi, C.S., Member (Judicial) and Sh. Madhu Mohan Damodhar, Member (Technical) Sh. Karan Talwar, Advocate for the Appellant Sh. R.K. Dass, Assi .....

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er'07] and M/s Mahindra Navistar Automotives Limited (hereinafter referred to as 'MNAL' [November'07-September'08]. (ii) For this purpose they entered into agreement with MNAL and MIL for sale of body to be built on the chassis supplied to them by MNAL and MIL. (iii) The CENVAT credit of duty paid on such chassis was taken by the Appellants. (iv) For the purpose of building body, the appellants purchased various raw materials on their own account and undertook the body buildi .....

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f Section 4(1)(b) read with Rule 6 of the Valuation Rules. They are paying excise duty on the value determined in the aforesaid manner. (viii) In the above background, the appellants were issued with a show cause notice dated 01.05.2008 proposing demand of differential duty of ₹ 3,25,06,378/- @ 1% on the differential value of ₹ 19,08,21,210/- for the period from April 2007 to October, 2007 on the ground that they were acting as job worker to MIL and were therefore required to pay dut .....

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with another show cause notice dated 25.11.2008 demanding differential duty of ₹ 4,63,05,014/- on the differential value of ₹ 34,11,05,546/- for the period from November, 2007 to September, 2008 on the ground that they were acting as job worker for MNAL and was therefore required to pay duty in terms of Rule IOA of the Central Excise Valuation Rules, 2000. (xii) Order-in-Original dated 31.03.2009 / 01.04.2009 confirmed the demands as proposed in the show cause notice, also imposed eq .....

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ants in those cases, in the correct perspective. He made the further following submissions: (a) In the above decisions, the Hon'ble Tribunals have failed to consider section 2(h) of the Central Excise Act, 1944 wherein the term sale has been defined to mean any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration. (b) Reference can be drawn to the decision of the Tribunal in the c .....

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the said definition, it is sufficient that there is transfer of possession to be considered as purchase and allowed the benefit. (c) The said decision has been upheld by the Hon'ble Supreme Court in the case of CCE Vs Aditya Birla Nuvo Ltd., [2015 (325) ELT 635 (SC)] wherein the Hon'ble Supreme Court has referred to the principle laid down by the Constitutional Bench of the Hon'ble Supreme Court in the case Ujagar Prints vs. Union of India [1988 (38) ELT 535 (SC)]. (d) Also, the Hon .....

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ection 3 of the Excise Act. In other words, section of the Excise Act being the charging section, the definition of transaction value must be read in the text and context thereof and not dehors the same. (f) In the instant case, while calculating the duty liability, the Ld. Commissioner has adopted highest selling price for a particular model on monthly basis on the basis of sales effected during a particular month, instead of adopting the actual sale price. Since the same is contrary to the pri .....

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set aside. Hence interest under Section 11 AB is also not payable by them. 4. On behalf of the department, the Learned AR Sh. R.K. Dass vigorously opposed the appeals. He stated that the matter is no longer res integra and has been settled in favour of the department in a number of Tribunal judgments. He also placed reliance on Board's Circular 902/22/2009-CX dated 20.10.2009. 5. Heard both sides and have gone through the facts, evidence and judgments placed before us. 6. We find it for a f .....

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behalf of the principal manufacturer. In the facts and circumstances of the case, it is apparent that the said firms had cleared the goods in relation to the body fabricating and mounting on the chassis which were supplied to the said firms free of cost by the manufacturer of chassis. Being so, the activity 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 .....

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ula Subba Rao v. State of A.P. 5. Jiwan Singh & Sons v. State of Punjab 6. Commissioner of Sales Tax v. Haji Abdul Majid & Sons. All these decisions were in respect of dispute with regard to levy of sale tax in respect of body built on chassis. These decisions are, therefore, distinguishable from the present case as the dispute before us is with regard to valuation of the goods under Rule 10A of the Central Excise Rules. 15. Appellants also contended that Rule 10A is attracted only .....

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ds on behalf of was not in respect of interpretation of Rule 10A which was not in fact in existence at that time. We, therefore, find that these decisions are distinguishable from the present case. 16. The ld. Sr. Advocate also relied on the Patna High Court s decision in the case of Tata Engineering & Locomotive Company Ltd. which was in respect of body builders. We find that the decision of the Hon ble Patna High Court was in respect of show cause notice issued by the Excise Departmen .....

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und the said decision was in respect of the interpretation of Rule 10A and the Tribunal had taken a view that for applicability of Rule 10A the definition should satisfy three requirements viz. (i) he should manufacture or produce goods; (ii) he should do it on behalf of a principal manufacturer; and (iii) he should do it from any inputs or goods supplied by the principal manufacturer or by any other person authorized by him. We find that the Tribunal in that case had examined the agreement betw .....

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pellants had not produced before us any copy of the agreement between the Tata Motors and the appellants. In the absence of any detailed contract as was available in the case of M/s. Innocorp. Ltd. before the Tribunal in that case, the ratio of the said decision is not applicable to the present case. 18. We are, therefore, of the view that the decision of the Audi Automobiles cited supra is squarely applicable to the present case before us and accordingly we hold that the value of the goods .....

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0A of the Valuation Rules along with interest. However, sales tax amount paid by the appellants needs to be deducted from the value. 7. This decision was appealed against by Hyva India Ltd. However, the Hon'ble High Court of Bombay did not find any merit and dismissed the writ petition, as reported in Hyva India Vs Union of India [2015 (327) ELT 41 (Bom)] the relevant part of which is extracted as under: 63. Finally, and in the light of the view that we have taken we need not go into al .....

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order dated 30th November, 2012 passed by the Tribunal is concerned, that clearly proceeds on the applicability of Rule 10A to the transactions and dealings noted therein. Therefore, it would be open for the petitioner to urge in other and future cases that the relationship being not covered by Rule 10A it has no applicability. In other words, they can urge that Rule 10A cannot be invoked or has been erroneously and incorrectly invoked and applied to a given transaction and case. All such conten .....

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eferred to as a principal manufacturer nor could the activity carried out be deemed as job work also because a person engaged in the manufacture or production of goods has not obtained any inputs or goods from the principal manufacturer or by any person authorised by him. In other words, no inputs or goods being supplied by the said principal manufacturer or any other person authorised by him the activity cannot be termed as job work within the meaning of the explanation. In that event it would .....

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at the Revenue s interpretation and which we have accepted does not render the phrase on behalf of redundant. If the Rule is read in its entirety with the proviso and the explanation, then we are sure that the applicability of Rule 10A is a matter which can be independently dealt with and depending on the facts and circumstances in each case. Therefore, it is not possible to lay down a general rule as to when can the process be said to be a job work and undertaken on behalf of a person named as .....

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