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TMI Blog2023 (11) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11A of Central Excise Act, 1944, along with applicable interest under section 11AB of Central Excise Act, 1944, and imposition of penalty of like amount under section 11AC of Central Excise Act, 1944, is the correctness of including value of 'scrap' arising from 'job-work' in the assessable value as additional consideration from the principal for undertaking such work. 2. The appellant undertakes 're-rolling' of 'mild steel billets and ingots' supplied by M/s Larsen & Toubro Ltd, Pondicherry under an agreement that, inter alia, reassures quality in terms of the finished goods returned to the principal containing 90% of the supplied raw material. According to central excise authorities, the implication therein is that the residue of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eering Works and Lloyds Steel Industries become handy and useful for determining the correct assessable value of the said goods. 13. Further the principal manufacturer L&T had agreed to receive from the job worker 90% of the rolled products against 100% supply of raw material to the job worker. The contract between them, stipulated that the rest of the quantity in the form of scrap would be retained by the job worker. Clearly, the sale value of the scrap at the hands of the job worker was an additional consideration for doing the conversion job for the supplier of the raw material. Going by the definition of transaction value, the principal manufacturer needed to pay not only the job charges but also a value equal to the money value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oints and crossings are manufactured a small quantity of raw material become scrap/waste. But that does not detract from fact that to manufacture 100 kg. of points and crossings 105 kg. of raw material has to be used. This element i.e. the cost of raw material would remain the same irrespective of whether scrap/waste is returned to the Railways or kept by the Appellants. The Appellants charge what are known as conversion charges. This includes their labour charges. Such conversion charges would have to be added to the cost of raw material. To this would have to be added profits, if any, earned by the processor (Appellant). Thus suppose the conversion charges are Rs. 450/-, the cost of 105 Kgs. of raw material is Rs. 1,000/-, and Rs. 50/- is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.L.T. 295 (S.C.)]. However, in a subsequent judgment in the International Auto Ltd. (supra), the Apex Court held that non-inclusion of cost of certain inputs in the assessable value of an intermediate product manufactured by the job worker was of no consequence as the principal manufacturer cleared the final product on payment of appropriate duty and the duty paid by the job worker on the intermediate product was available to the principal manufacturer as Cenvat credit.' 6. Here too, it is not in dispute that the landed cost of raw materials is not doubted and that the impugned 'scrap' has been generated from such raw material. That value, having been included once, is not required to added once again for assessment to duty. 7. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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