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2019 (3) TMI 516

..... 05 to 2007-08 - time limitation - Held that:- Undisputedly appellant is a job worker for appellant no. 2; manufactures Vicks Action 500 and Vicks Inhalers; discharges the duty liability on the said products based upon the formula of valuation as settled by the Apex Court in the case of Ujagar Prints [1989 (1) TMI 124 - SUPREME COURT OF INDIA] i.e. cost of materials plus job work charges (which includes job workers profit); filed regularly the cost sheets, declarations etc., with the authorities as being job worker of the appellant no.2. In the absence of any knowledge of any payment made by appellant no. 2 to Procter & Gamble, USA, it cannot be held that appellant had misdeclared the value of the goods manufactured on job work basis. Further, in the entire proceedings, the Revenue has not disputed that appellant had been filing cost sheets along with the declaration made by appellant no.2 when they manufactured and cleared Vicks Action 500 and Vicks Inhalers from their factory premises. If that be so, alleging that there was a misdeclaration of the value in the case in hand seems to be unfounded and incorrect - also reading the Apex Court Judgment in the case of Ujagar Print .....

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..... o.2 as royalty to their parent concern in the value for discharging the central excise duty. Appellant did not agree with the contentions raised hence a show cause notice dated 03-08-2009 was issued for demand of the duty for the period 2004-05 to 2007-08, demanding interest and also seeking to impose equivalent penalty on the appellant and penalty on appellant no.2. Both the appellants contested the show cause notice on merits as well as on limitation. The adjudicating authority after following due process of law, confirmed the demands raised with interest and also imposed penalties on both the appellants. 3. Learned Counsel submits after giving overall facet of the case submits the sequence of events which are reproduced as under: Date Event 19.09.2005 to 22.09.2005 Audit conducted by C & AG 13.10.2006 to 18.10.2006 Audit conducted A.G s Audit Party 12.11.2007 to 15.11.2007 Audit conducted A.G s Audit Party November, 2007 Audit by the Central Excise Audit Group December, 2008 Audit by the Central Excise Audit Group 16.04.1999 SCN issued to the Appellant demanding differential duty on job work valuation 27.09.2005 Appellant submitted details that the goods were valued based on .....

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..... wledge of the appellant. He would submit that appellant was given a direction to manufacture the goods on job work basis and valuation has to be done in accordance with the documents given to them by appellant no.2 which they have done so. It is his submission that there is no free supply of material to the appellant from appellant no.2. Further it is his submission that in any case any royalty paid for the purpose of usage of trade mark is not includable in the value when the goods are manufactured under job work basis. He would submit that the entire demand is barred by limitation in as much, the job work arrangement between appellant and appellant no.2 is within the knowledge of department since 1999, as a valuation dispute itself was raised on the goods manufactured on job work basis; there were regular audits conducted by the departmental authorities and C & AG department wherein job work agreement, manner of valuation of goods, has been examined and no demands were raised. It is his submission that for the period April 2003 - March 2007, proceedings were initiated against the appellant and method valuation adopted for job work manufactured goods is on record the copy of t .....

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..... case, the value of the goods cleared were in doubt accordingly after process of elimination, residual rule 11 was followed by which, provisions of Rule 6 are made applicable. It is her submission that the demands which are contested on limitation are also correct as non-inclusion of royalty charges in the assessable value came to the knowledge of the department only after detailed investigation conducted; as per Notification No. 36/2001-CE (NT) it is a job workers responsibility to declare the correct assessable value, and appellant has failed to declare correct assessable value. She relies upon the following case laws: i) Karamyogi Dyeing Pvt Ltd., Vs CCE, Mumbai [2002 (148) ELT 431 (Tri-Mumbai)] ii) Vishnu Dyeing & Printing Works Vs CCE, Mumbai [2008 (221) ELT 369 (Tri-Mumbai)] It is her further submission that the adjudicating authority in the case as discussed each and every aspect which were argued by the assessee more specifically regarding periodical submission of cost sheets with the authorities, method in which cost of production was arrived as per manufacturing agreement between appellant and appellant no. 2 was also considered in its correct perspective and has come .....

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..... Action 500 and Vicks Inhalers from their factory premises. If that be so, alleging that there was a misdeclaration of the value in the case in hand seems to be unfounded and incorrect. 10. Secondly, reading the Apex Court Judgment in the case of Ujagar Prints the discharge of the duty liability by the appellant based upon the cost of material plus job works charges during the period in question is the correct law followed and was followed. 11. As regards the limitation, we find that on limitation also the appellant has a case in his favour. Undisputedly, the declaration of the price which has been made by appellant is based upon the cost sheets given by appellant no. 2 to him and discharged the duty liability accordingly. It is also undisputed that the appellant has been filing the monthly returns with the authorities. If that be so a show cause notice dated 03-08-2009 invoking the extended period for demanding the duty for the period 2004- 05 to 2007-08 is blatantly hit by limitation. In our view, the demand cannot sustain on limitation also. 12. The appeal filed by appellant is acceptable on merits as well as on limitation and accordingly we set aside the demands raised on the ap .....

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