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2020 (3) TMI 308

..... arily sold at the factory gate of M/s. Inova and hence, the price adopted for payment of duty by M/s. Inova was not the sole consideration for sale as per Section 4 (1) (a) of the Central Excise Act, 1944 - HELD THAT:- It is an admitted fact, as seen from the Show Cause Notice as well as the impugned order, that M/s. Inova has procured the urinal casings from M/s. Roca by transaction of purchase and sale. Merely because the goods manufactured by M/s. Inova bear the brand name of M/s. Roca, the Department has viewed the transaction as a manufacture done by a job worker on behalf of the principal manufacturer. The very same issue decided in the case of SUJHAN INSTRUMENTS VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II, HONEYWELL ELECTRICAL .....

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..... supplying the major input viz. urinal casing to M/s. Inova on sale basis. M/s. Inova fixed the Electronic System in the urinal casing in order to provide automated function. The urinal casings with this automated function were then packed as a single unit per carton box and dispatched to various depots of M/s. Roca on sale basis as per the purchase order. The price of the goods was arrived at by M/s. Inova by cost construction method with some profit margin. This cost construction price was subjected to negotiation with M/s. Roca to arrive at the agreed price, on which the duty was paid. All these activities were governed by the conditions laid down in the agreement entered between M/s. Inova and M/s. Roca (previously known as Parryware Div .....

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..... ed through sales invoices. The Department observed that M/s. Inova was only acting as a job worker for M/s. Roca and that the goods were not ordinarily sold at the factory gate of M/s. Inova and hence, the price adopted for payment of duty by M/s. Inova was not the sole consideration for sale as per Section 4 (1) (a) of the Central Excise Act, 1944. That with effect from 01.04.2007, the valuation of goods manufactured by job workers should be as per clause (ii) of Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. 3. Show Cause Notice dated 24.04.2012 was issued to M/s. Inova raising a demand of differential duty for the period from 01.04.2007 to 31.12.2011 along with interest and also proposin .....

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..... anufacturer. In the present case, the urinal casings are not supplied by M/s. Roca. In fact, it is purchased by M/s. Inova from M/s. Roca. No items were supplied free of cost by M/s. Roca. As M/s. Inova purchased the urinal casings, which fact is admitted in the Show Cause Notice, it goes without saying that the urinal casings are then the property of the appellant i.e. M/s. Inova. Thus, even before manufacture takes place, the goods are the property of M/s. Inova and does not belong to M/s. Roca. M/s. Inova is an independent entity having independent infrastructure and they did not manufacture goods on behalf of M/s. Roca. Since the title of these goods belong to the appellant, the conditions for becoming a job worker is not satisfied. 4.3 .....

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..... The very same issue was discussed by the Tribunal in the case of M/s. Sujhan Instruments (supra) wherein the Tribunal observed as under : 8.3 A perusal of the SCN No. 104/2009, dated 23-10-2009 reveals that department is inclined to treat Sujhan as a job worker of Honeywell primarily on the grounds that supplies of raw materials that required to be approved by the latter, quality control exercised by Honeywell, 99% of the finished goods are sold to the latter and that Honeywell s brand name and MRP stickers are used on the packing. The Rule 10A has been inserted in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, w.e.f. 1-4-2007. As per this rule, the value at which principal manufacturer sells his goods will .....

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..... l on contract that should detract from acceptance of the transaction between Sujhan and Honeywell to be one of principal to principal basis. The arrangement between Sujhan and Honeywell, in our view, is on the lines of contract manufacturing as distinguished from job worker . The contract manufacturers are not supplied with the raw material from principal manufacturers, like job workers , but they are required to purchase them from the market, very often from vendors who are approved by the principal manufacturer for quality point of view. The principal then buys finished products from the contract margin and very often sales them to his core customer, sometimes with enhanced margin. Department has also not unearthed or brought out anything .....

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