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2016 (11) TMI 1342 - CESTAT NEW DELHI

2016 (11) TMI 1342 - CESTAT NEW DELHI - TMI - Valuation of intermediate products manufactured by the appellant for the principal manufacturer - ITOS Agglomerate - The Revenue held that w.e.f. 1.4.2007, the valuation of the goods manufactured on job work basis on behalf of the principal manufacturer is required to be done in terms of Rule 10 A of Valuation Rules, 2000 - Held that: - the identical issue has been settled by the Tribunal in Advance Surfactants India Ltd. [2011 (3) TMI 1380 - CESTAT, .....

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16 - Mr. (Dr.) Satish Chandra, President And Mr. B. Ravichandran, Member (Technical) Shri B.L. Narsimhan, Advocate for the appellant. Shri Amresh Jain, DR for the respondent. Per B. Ravichandran: The appellants are aggrieved by the order dated 27.04.2010 of Commissioner of Central Excise, Indore. The appellants are engaged in the manufacture of ITOS Agglomerate , an intermediate product, used in the manufacture of Detergent Powder. They are manufacturing the same on job work basis for M/s. Proct .....

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le 10 A is not applicable, the provisions of Rule 10 A(iii) is to be applied. The Revenue held that the appellants were required to discharge excise duty in terms of Rule 8 of Valuation Rules i.e. on 110% of value of cost of production. The duty demand was confirmed by the lower authority holding that the appellants have to pay a differential duty of ₹ 73,81,722/-. He also imposed penalty of equivalent amount. 2. We have heard both the sides and perused the appeal records. 3. The lower aut .....

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of other articles. In fact, they are job workers of intermediate goods and the final product is manufactured by M/s.Procter & Gamble. We find in such situation Rule 8 cannot be made applicable. 4. We note that the identical issue has been settled by the Tribunal in Advance Surfactants India Ltd. - 2011 (274) ELT 261 (Tribunal-Bang.), wherein in paras 5 to 9 is held as under:- "5. We have considered the submissions made at length by both I sides and perused the records. 6. The undisputed .....

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at the said LABSA is returned back to Ms. HUL for further consumption in their factory premises for manufacturing of soaps and detergents. It is nobody 's case that LABSA consumed by HUL is on behalf of the appellant herein. 8. At this juncture, we find that a clarification which has been issued by the Ministry of Finance dated 31-3-2010 needs to be addressed to. We reproduce the said clarification. F. No. 6 15/2009 -CX. 1 Government of India Ministry of Finance Department of Revenue Central .....

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s introduced rom 1-4-2007, is a self contained scheme for the goods manufactured by a job worker. The general principle which has been followed for determining the value in such cases is that the value, at which the principal manufacturer sells the goods, after it is received from the job worker, is considered as the assessable value. Following the said general principle, it is felt the where the goods manufactured by a job worker are used for captive consumption by the principal manufacturer, i .....

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he Circular are inconsistent with the provisions o Rule 8. The provisions of Rule 8 can be brought into play only if there is consumption of the goods by himself or on behalf of an assessee. Since the said clarification is against the mandate of the said Rule 8 of Central Excise Valuation (Determination of Prices of Excisable Goods) Rules, the said clarification is untenable and has to be held as such. 9. We find that our above view has been confirmed by the bench in the Tara Industries Ltd. cas .....

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been valued under Rule 8 of the Central Excise Valuation Rules, 2000 which came into force w.e.f. 1-7-2000. We read that Rule. "Rule 8. Where the excisable goods are not sold by the assessee but are used for consumption or on his behalf in the production or manufacture of other articles, the value shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods". A perusal of the above Rule makes it clear that it relates to valuation of "excisable .....

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ssued by the Central Board of Excise and Customs vide Circular No. 619/10/2002-CX., dated 19-2-2002. Paras 2 and 3 of the Circular read as under : "2. The matter has been examined by the Board. It is observed that the system of getting goods manufactured on job work basis is not new. Under the provisions of the earlier Section 4 and the Rules made thereunder the matter has been finally decided by the Apex Court in the case of Ujagar Prints Ltd. [1989 (39) E.L.T 493 (S.C.)] and the case of P .....

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t and publicity, overheads etc.) incurred by the buyer (or the supplier of the raw materials), where the dealing between the two are on principal-to-principal basis. The mere fact that the buyer is supplying some raw materials free of cost to the job worker, will not be sufficient ground to contend that the dealings between the two are not at arms length. Goods manufactured on job work were earlier assessed under the residuary Rule 7 of the erstwhile Valuation Rules of 1975 read with Rule 6(b) r .....

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