Custom, Excise & Service Tax Tribunal
Maini Precision Products Pvt Ltd vs Bangalore-Ii on 4 November, 2025
E/22290, 22543/2014, E/20537,
20556/2015, E/20884, 20885/2018
& E/20771-20772/2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, BANGALORE
REGIONAL BENCH - COURT NO. 1
Central Excise Appeal No. 22290 of 2014
[Arising out of Order-in-Original No.10/2014 dated 24.03.2014 passed
by the Commissioner of Central Excise, Bangalore]
M/s. Maini Precision Products
Pvt. Ltd. Appellant(s)
Shed No.C-217, 4th Cross, 1st Stage
Peenya Industrial Estate,
Bangalore-560 058.
VERSUS
Commissioner of Central
Excise,
Bangalore-II Commissionerate, Respondent(s)
C.R. Building, No.1, Queens Road,
Bangalore-560 001.
WITH
1. CENTRAL EXCISE APPEAL NO.22543 of 2014
(M/s. Bosch Ltd. Vs. Commissioner of Central Excise, Bangalore)
[Arising out of Order-in-Original No. 10/2014 dated 24.03.2014
passed by the Commissioner of Central Excise, Bangalore]
2. CENTRAL EXCISE APPEAL NO.20537 of 2015
(M/s. Bosch Ltd. Vs. Commissioner of Central Excise, Bangalore)
[Arising out of Order-in-Original No.26/2014 dated 18.12.2014
passed by the Commissioner of Central Excise, Bangalore]
3. CENTRAL EXCISE APPEAL NO.20556 of 2015
(M/s. Maini Precision Products Pvt. Ltd. Vs. Commissioner of
Central Excise, Bangalore)
[Arising out of Order-in-Original No.26/2014 dated 18.12.2014
passed by the Commissioner of Central Excise, Bangalore]
4. CENTRAL EXCISE APPEAL NO.20884 of 2018
(M/s. Maini Precision Products Pvt. Ltd. Vs. Commissioner of Central
Excise, Bangalore)
[Arising out of Order-in-Appeal No.23/2018-CT dated 04.01.2018
passed by the Commissioner of Central Tax (Appeals-II),
Bangalore]
5. CENTRAL EXCISE APPEAL NO.20885 of 2018
Page 1 of 24
E/22290, 22543/2014, E/20537,
20556/2015, E/20884, 20885/2018
& E/20771-20772/2023
(M/s. Maini Precision Products Pvt. Ltd. Vs. Commissioner of
Central Excise, Bangalore)
[Arising out of Order-in-Appeal No.22/2018-CT dated 04.01.2018
passed by the Commissioner of Central Tax (Appeals-II),
Bangalore]
6. CENTRAL EXCISE APPEAL NO.20771 of 2023
(M/s. Bosch Ltd. Vs. Commissioner of Central Tax, Bangalore)
[Arising out of Order-in-Appeal No.461-462/2023 dated
14.08.2023 passed by the Commissioner of Central Tax (Appeals-
I), Bangalore]
7. CENTRAL EXCISE APPEAL NO.20772 of 2023
(M/s. Bosch Ltd. Vs. Commissioner of Central Tax, Bangalore)
[Arising out of Order-in-Appeal No.461-462/2023 dated
14.08.2023 passed by the Commissioner of Central Tax (Appeals-
I), Bangalore]
APPEARANCE:
Mr. Syed M Peeran with Mr. Nischal K.M. and Mr. Rohan Karia,
Advocates for the Appellant
Ms. Arpitha. S, Joint Commissioner (AR) for the Respondent
CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL)
HON'BLE MR. PULLEGAL NAGESWARA RAO,
MEMBER (TECHNICAL)
FINAL ORDER NO. 21771 TO 21778 / 2025
DATE OF HEARING: 02.07.2025
DATE OF DECISION: 04.11.2025
PER: D.M. MISRA
These appeals are filed against respective Orders-in-
Original / Orders-in-Appeal passed by the Commissioner of
Central Excise / Commissioner of Central Excise (Appeals),
Bangalore, which are tabulated as below:-
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& E/20771-20772/2023
Appeals filed by M/s. Maini Precision Products (P) Ltd.
Appeal E/22290/2014 E/20884/2018 (C- E/20556/2015 (B-59 E/20885/2018 (B-59
No. (C-217 Unit) 217 Unit) Unit) Unit)
Period July 2008 to February 2013 to March 2009 to April 2013 to
Involved December December 2013 March 2013 December 2013
2012
SCN No. No. 16/2013 No. 23/2014 dated No. 07/2014 dated No. 39/2014 dated
& date dated 03.03.2014 03.04.2014 01.05.2014
31.07.2013
OIO No. No. 10/2014 No. 48/ADC/2015 No. 26/2014 dated No. 62/ADC/2015
& date dated dated 29.05.2015 18.12.2014 dated 29.05.2015
11.04.2014
OIA No. N.A. No. 23/2018-CT N.A. No. 22/2018-CT
& date dated 04.01.2018 dated 04.01.2018
Demand Rs.85,15,519/- Rs.23,27,226/- Rs.66,85,006/- under Rs.7,68,044/- under
of Duty under Section under Section Section 11A(1) of Section 11A(1) of the
11A(1) of the 11A(1) of the the Central Excise Central Excise Act,
Central Excise Central Excise Act, Act, 1944. 1944.
Act, 1944. 1944.
Interest Under Section Under Section Under Section 11AB Under Section 11AB /
11AB / 11AA 11AA of the Central / 11AA of the 11AA of the Central
of the Central Excise Act, 1944. Central Excise Act, Excise Act, 1944.
Excise Act, 1944.
1944.
Penalty Rs.85,15,519/- Rs.23,27,226/- Rs.66,85,006/- under Rs.7,68,044/- under
under Section under Section 11AC Section 11AC of the Section 11AC of the
11AC of the of the Central Central Excise Act, Central Excise Act,
Central Excise Excise Act, 1944. 1944. 1944.
Act, 1944;
Rs.10,00,000/-
under Rule 25
of Central
Excise Rules,
2004.
Demand Rs.69,35,134/- N.A. March 2009 to N.A.
barred by (July 2008 to February 2013
limitation June 2012)
Demand Rs.15,80,385/- - March 2013 -
within (July 2012 to
limitation Dec 2012)
Appeals filed by M/s. Bosch Ltd.
Appeal E/22543/2014 E/20771/2023 E/20537/2015 E/20772/2023
No.
OIO No. 10/2014 dated No. 48/ADC/2015 No. 26/2014 dated No. 62/ADC/2015
No. & 11.04.2014 dated 29.05.2015 18.12.2014 dated 29.05.2015
date (Pg. 76 to 95) (Pg. 112 to 128)
OIA N.A. No. 461-462/2023 N.A. No. 461-462/2023
No. & dated 14.08.2023 dated 14.08.2023
date (Pg. 33 to 42) (Pg. 33 to 42)
Penalty Rs.5,00,000/- Rs.7,50,000/- Rs.5,00,000/- under Rs.2,00,000/- under
imposed under Rule 26 of under Rule 26 of Rule 26 of Central Rule 26 of Central
on M/s. Central Excise Central Excise Excise Rules, 2004. Excise Rules, 2004.
Page 3 of 24
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& E/20771-20772/2023
Bosch Rules, 2004. Rules, 2004.
2. Briefly stated the facts of the case are that the appellant
are engaged in the manufacture of precision components, filters
and filter parts falling under Chapter 84 of the Central Excise
Tariff Act, 1985. On the basis of intelligence that though the
filter and filter parts being automobile parts and required to be
assessed under Section 4A of the Central Excise Act, 1944 (CEA,
1944, for short), the appellant cleared the manufactured goods
to M/s. Bosch Ltd., Bangalore (Bosch, for short) discharging duty
on the transaction value under Section 4(1)(a) of the CEA, 1944.
Consequently, investigation was initiated and on completion of
the same, (Appeal No. E/22290/2014) a show-cause notice was
issued to the appellant alleging that during the period July 2008
to December 2012, the appellant should have adopted the
assessable value of filter and filter parts cleared by them to
Bosch based on the selling price at which the goods were sold by
Bosch being their 'job worker' in terms of Rule 10A(ii) of the
Central Excise Valuation (Determination of Price of Excisable
Goods) rules, 2000 (Valuation Rules, 2000 for short); differential
duty of Rs.85,15,519/- was proposed to be recovered with
interest and penalty. On adjudication, the demand was
confirmed by the adjudicating authority with interest and
penalty; also penalty under Rule 26 of Central Excise Rules,
2002 has been imposed on M/s Bosch. Similarly, in other three
appeals, show-cause notices were issued and demands with
interest and penalties were confirmed by the adjudicating
authority / Commissioner(Appeals), as tabulated above. Hence,
these four appeals.
3.1. At the outset, the learned advocate for the appellant has
submitted that during the relevant period, the filter and filter
parts manufactured by the appellant are entirely sold to Bosch
under a Corporate Agreement dated 17.08.2010. He has
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& E/20771-20772/2023
submitted that such an arrangement has been in place for more
than 37 years. Under the said Agreement, purchase orders are
issued from time to time for supply of filter and filter parts
thereof bearing trademarks / legends / logos of Bosch. The
appellant accordingly procured raw materials such as Aluminium
ingots, screws boring scrap, Zinc plating etc. on their own
account and manufactured the filter and filter parts as per the
design, drawings and technical specifications supply by Bosch.
These manufactured goods are later supplied/sold directly to the
warehouses of Bosch situated at Yeshwanthpur (Bangalore),
Manesar, Secunderabad and Chennai. These filters and filter
parts are, being automobile parts, though leviable to duty on
MRP basis in terms of Section 4A of the CEA, 1944; however as
they were supplying these goods directly to Yeshwanthpur and
other warehouses of Bosch, an industrial consumer, the
procedure of affixing MRP was not followed as being not
applicable; accordingly, the assessment was not done under
Section 4A of the CEA, 1944 but assessed applying transaction
value in terms of Section 4(1)(a) of the CEA, 1944. They have
been filing statutory returns from time to time accordingly
declaring the value of these products. He has submitted that the
first show-cause notice was issued to them on 31.07.2013 for
the period from July 2008 to December 2012 invoking larger
period of limitation demanding differential duty alleging that the
assessable value arrived at is incorrect as the transaction value
under Section 4(1)(a) is not applicable to the clearance and
assessment should have been done under Section 4(1)(b) of the
CEA, 1944 read with Rule 10A of the Central Excise Valuation
Rules, 2000.
3.2. Referring to the ingredients under Section 4(1)(a) of CEA,
1944, he has submitted that Department has disputed the price
at which the goods are sold by the appellant to Bosch. He has
submitted that in terms of the Agreement, the appellant have
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& E/20771-20772/2023
procured the raw materials from independent sources by using
their own finance and converted the raw materials into finished
goods employing their own labour, machinery in the
manufacture of the filter and filter parts. The manufactured
goods are sold entirely to Bosch and the sale was as per the
agreed price between the appellant and Bosch from time to time.
Bosch was providing the required product design, drawings,
technical specifications, brand, logo etc. to the appellant. They
arrived at the price of the manufactured goods taking into
account the cost of raw materials, manufacturing overheads
added with reasonable profit margin. Thus, the price at which
the appellants sold the filter and filter parts is the sole
consideration and no extra consideration is received by them.
Thus, they complied with all the conditions of transaction value
prescribed under Section 4(1)(a) of the CEA, 1944. He has
submitted that the transaction between the appellant and the
Bosch are at arm's length and merely because the filter and filter
parts are supplied exclusively to Bosch with its brand name, and
adhering to its quality/standard cannot be considered that the
appellant is a job worker of Bosch. He has submitted that as
long as the appellant has procured the goods on their own and
manufactured the goods as per the drawings and technical
specifications, brand name, logo etc. by employing their own
machinery, labour etc., they cannot be treated as job worker of
Bosch and the transaction value be adopted in terms of Section
4(1)(a) of the CEA, 1944 for discharging duty. He has submitted
that the issue has been addressed by this Tribunal in the case of
Mallya Fine Chem Pvt. Ltd. Vs. CCE [Final Order No.20829-
20854, 20855-20858/2024 dated 10.09.2024].
3.3. Further, the learned advocate has submitted that in the
impugned order, the learned Commissioner/Commissioner
(Appeals) has wrongly interpreted the provisions of Section 4 of
the CEA, 1944 and the Valuation Rules, 2000 holding that Rule
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10A(ii) would be applicable to the present case. He has
submitted that the transaction between the appellant and Bosch
is transparent and is under a written agreement. Further, no
evidence has been adduced by the Department to show that the
appellant received additional consideration towards sale of the
goods; hence, rejection of the transaction value is incorrect.
3.4. Learned advocate has further submitted that in the case of
appeal No. E/22290/2014 and E/20884/2018 relating to their
unit C-217, pertaining to the period July 2008 to December
2013, no components, parts / raw materials have been supplied
by Bosch to the appellant. Whereas with regard to appeals
E/20556/2015 and E/20885/2018 concerning their B-59
manufacturing unit for the periods March 2009 to March 2013
and April 2013 to December 2013, respectively, some
components imported by Bosch and sold at market prices to the
appellant which have been used in the manufacture of filter and
filter parts. In other words, Bosch has sold the inputs to the
appellant on principal to principal basis. There is no allegation
against the appellant by the Department by producing evidence
that the sale price of the raw materials has been influenced; also
they were not supplied with any raw materials, components free
of cost basis; hence in any case, Rule 10A of the Valuation
Rules, 2000 cannot be applied. In support, they referred to the
judgment of the Tribunal in the case of Ravi Kiran Plastics Pvt.
Ltd. Vs. CCE&ST, Vadodara [2014(303) ELT 144 (Tri. Ahmd.)].
3.5. It is submitted that the impugned order has been passed
confirming the differential duty demand solely on the basis of the
findings that the transaction between the Appellants and Bosch
is not in the ordinary course of trade or business, and hence, the
value of the transaction is to be determined under Section
4(1)(b) of the Central Excise Act, 1944. The impugned order has
nowhere alleged that the Appellants and Bosch are related
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& E/20771-20772/2023
persons. Hence, the only contention of the Department is that
the transaction between the Appellants and Bosch is not in the
ordinary course of trade or business. In this regard, the
Appellants reiterate that they have been manufacturing filters
and parts thereof and clearing the same to Bosch on a principal-
to-principal basis.
3.6. The Appellants submit that the contention of the
Department that Bosch has considerable control over the
Appellants has no bearing in the instant case, since the
Appellants are clearing the filters and parts thereof on a
principal-to-principal basis and that the Appellants are earning a
reasonable profit margin. Merely because the Appellants are
clearing the goods on a mutually beneficial and reasonable price,
it does not mean that the transaction is not in the ordinary
course of business. In such cases, it cannot be simply held that
the transaction is not in the ordinary course of business.
By applying the decision passed in M/s. Mallya Fine
Chem (supra), it is evident that the transaction between the
Appellants and Bosch is in the ordinary course of business and
therefore, the valuation is to be determined in terms of Section
4(1)(a) of the Central Excise Act, 1944 since price is the sole
consideration for the sale in the instant case.
3.7. It is a settled legal position that just because the product
is sold only to one buyer, it does not mean that it is not a sale
on Principal-to-Principal basis or it is not in the ordinary course
of business. In this regard, the Appellants place reliance on the
following decisions:
i. Sidhosons v. UOI- 1986 (26) E.L.T. 881 (SC);
ii. Whitco Ltd. v. UOI - 1995 (75) E.L.T. 61 (Guj.);
iii. TTK Health Care Ltd vs. CCE, Guntur - 2007 (207)
E.L.T. 453 (Tri. - Bang.);
iv. Eastern Bakeries Pvt. Ltd. vs. CCE, Kolkata - 2013
(293) E.L.T. 593 (Tri. - Kolkata).
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3.8. It is therefore submitted that the Appellants have correctly
determined the taxable value in terms of Section 4(1)(a) of the
Central Excise Act, 1944. Consequentially, Section 4(1)(b) of the
Central Excise Act, 1944 cannot be made applicable and
therefore, the impugned order is not sustainable on this ground
alone.
3.9. Further, it is submitted that Rule 10A(ii) of the Valuation
Rules, 2000 cannot be made applicable to the instant case by
any means whatsoever even if it is assumed that Section 4(1)(b)
of the Central Excise Act, 1944 is applicable to the instant case.
Rule 10A of the Valuation Rules, 2000 applies in a situation
where the excisable goods are manufactured by a job-worker on
behalf of a principal manufacturer (a job--worker being 'A
person engaged in the manufacture of goods from inputs or
goods supplied by the Principal or by any other person
authorized by the Principal' in terms of Explanation to Rule 10A
of the Valuation Rules, 2000) and hence, the scope of Rule 10A
is restricted to the determination of value of excisable goods
manufactured by a job-worker from the raw materials supplied
by the Principal on behalf of the Principal. From the above, it is
evident that a job work transactions mandates cumulative
fulfilment of all the following conditions: (i) the job worker must
undertake the activity on behalf of the principal
manufacturer;(ii) the principal manufacturer must supply the
raw materials / inputs to the job worker on free of charge basis;
(iii) only conversion charges would be charged by the job worker
from the principal manufacturer. In support, they have referred
to the following decisions:-
i. Commissioner of Central Excise, Hyderabad v. Innocorp
Ltd., [2013 (289) E.L.T. 172 (Tri. - Bang.)]
ii. Ravi Kiran Plastics Pvt. Ltd. v. Commissioner Of C. Ex. &
S.T., Vadodara, [2014 (303) E.L.T. 144 (Tri. - Ahmd.)]
iii. Nirmal R. Ruparel v. Commissioner of Central Excise, Vapi,
[2014 (304) E.L.T. 711 (Tri. - Ahmd.)]
iv. Audi Automobiles v. Commissioner of Central Excise, [2010
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(249) E.L.T. 124 (Tri. - Del.)] (Relied upon by the
Department)
4.1. Per contra, the learned AR for the Revenue reiterating the
findings of the learned Commissioner has submitted that the
appellant manufactured precision components, filters and filter
parts exclusively for Bosch under contractual obligation and
supplied to the warehouses of Bosch at Yeshwantpur, Manesar,
Secunderabad and Chennai. The filter and filter parts were
supplied bearing the brand name of 'BOSCH' and as per the
Design and drawings and specifications provided by Bosch. The
parts supplied to Secunderabad and Chennai warehouses in
retail packaging were assessed under Section 4A of the CEA,
1944. The products supplied to Manesar and Yeshwantpur
warehouses were bulk packaging with no RSP affixed on it.
4.2 It is submitted that the relationship between the appellant
and Bosch is such that Bosch dictates all conditions of sale and
purchase; therefore, the transaction value between them is not
at arms length since both of them have interest in each others
business. Consequently, the transaction value ought to be
rejected and assessable value be redetermined. Since the
appellant functions as job worker of Bosch, the assessable value
ought to be determined based on Bosch's selling price to OEMs
rather than the appellant's cost price plus profit to Bosch.
Further referring to the number of supplies made by Bosch to
the appellant in the range of crores and the purchase price from
the appellant and selling price of Bosch are starkly different. It
is submitted that the relationship is thus not at arms length.
4.3. Further, referring to the judgments in the cases of Fiat
India [2012(283) ELT 161 (SC)], Audi Automobiles, SKF India
and Ravikiran Plastics Pvt. Ltd. [2014(303) ELT 144 (Tri.
Ahmd.)], she has submitted that the assessment be done under
Rule 10A of the Central Excise Valuation Rules, 2000. Further, it
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is submitted that the ratio in Mallya Fine-Chem's case is not
applicable since for the period post- 25.05.2007, a new
agreement had been executed between the parties in the said
case. It is submitted that the appellant is indeed a job worker of
Bosch; hence, rejection of transaction value and redetermination
of the same by taking into consideration the sale price of Bosch
to its customers is the correct approach made in the impugned
order.
5. Heard both sides and perused the records.
6. The principal issue arises in all these appeals is: whether
the filter and filter parts manufactured by the Appellant and
sold/ supplied exclusively to M/s. Bosch Ltd. at an agreed price
as per the Corporate Agreement dated 17.08.2010 be assessed
to duty under Section 4(1)(a) of the Central Excise Act, 1944 as
claimed by the Appellant or under Section 4(1)(b) of the Central
Excise Act, 1944 read with Rule 10A(ii) of the Central Excise
Valuation (Determination of Price of Excisable Goods) Rules,
2000 as held in the impugned Order.
7. Before proceeding to address the issues raised, it is
necessary to reproduce the relevant provisions viz. Section
4(1)(a), 4(1)(b) of the CEA, 1944 and Rule 10A(ii) of Central
Excise Valuation Rules, 2000 which read as follows:-
Section 4. Valuation of excisable goods for purposes of charging of
duty of excise.-- (1) Where under this Act, the duty of excise is
chargeable on any excisable goods with reference to their value,
then, on each removal of the goods, such value shall--
(a) in a case where the goods are sold by the assessee, for delivery
at the time and place of the removal, the assessee and the buyer of
the goods are not related and the price is the sole consideration for
the sale, be the transaction value;
(b) in any other case, including the case where the goods are not
sold, be the value determined in such manner as may be prescribed.
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Explanation.-- For the removal of doubts, it is hereby declared that
the price-cum-duty of the excisable goods sold by the assessee shall
be the price actually paid to him for the goods sold and the money
value of the additional consideration, if any, flowing directly or
indirectly from the buyer to the assessee in connection with the
sale of such goods, and such price-cum-duty, excluding sales tax and
other taxes, if any, actually paid, shall be deemed to include the duty
payable on such goods.
RULE 10A. Where the excisable goods are produced or
manufactured by a job-worker, on behalf of a person
(hereinafter referred to as principal manufacturer), then, -
(i) in a case where the goods are sold by the principal
manufacturer for delivery at the time of removal of
goods from the factory of job-worker, where the
principal manufacturer and the buyer of the goods
are not related and the price is the sole
consideration for the sale, the value of the excisable
goods shall be the transaction value of the said goods
sold by the principal manufacturer;
(ii) in a case where the goods are not sold by the
principal manufacturer at the time of removal of
goods from the factory of the job-worker, but are
transferred to some other place from where the said
goods are to be sold after their clearance from the
factory of job-worker and where the principal
manufacturer and buyer of the goods are not related
and the price is the sole consideration for the sale,
the value of the excisable goods shall be the normal
transaction value of such goods sold from such other
place at or about the same time and, where such
goods are not sold at or about the same time, at the
time nearest to the time of removal of said goods
from the factory of job-worker;
(iii) (iii) in a case not covered under clause (i) or (ii), the
provisions of foregoing rules, wherever applicable,
shall mutatis mutandis apply for determination of the
value of the excisable goods : Provided that the cost
of transportation, if any, from the premises,
wherefrom the goods are sold, to the place of
delivery shall not be included in the value of excisable
goods.
Explanation. - For the purposes of this rule, job-worker
means a person engaged in the manufacture or production
of goods on behalf of a principal manufacturer, from any
inputs or goods supplied by the said principal manufacturer
or by any other person authorised by him.
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8. The crux of the allegation is that the Transaction of sale
and purchase of filter and filter parts under the Corporate
Agreement dated 17.08.2010 between the appellant and BOSCH
Being not at arm's length and also the appellant since is of
worker of BOSCH, therefore, it attracts valuation under Section
4(1)(b) of the CEA, 1944 read with Rule 10A(ii) of the Central
Excise Valuation Rules, 2000.
9. To understand the inter se relation between the Appellant
and BOSCH, it is necessary to understand the Corporate
Agreement; relevant clauses of the same reproduced as below:-
1. Subject Matter of the Agreement and Contracting Parties
1.1 This Corporate Agreement (hereinafter referred to as the
"Master Agreement) governs the contractual terms for all
products as mentioned in Purchase Order supplied to
BOSCH by the Supplier ("Contract Products- It applies to
and governs all the purchase orders which may be issued in
relation to the supply of the Contract Products (Purchase
Orders) under this Master Agreement.)
1.2 The Supplier agrees that Bosch shall at all times be at liberty
to obtain its requirements of Contract Products
manufactured from one or more persons other than the
Supplier.
2. Basis of the Agreement
The Supplier will manufacture and supply to Bosch the
Contract Products bearing such trademarks and/or legends
and/or logos of Bosch in such manner as may be specified by
Bosch from time to time. The terms and conditions of
purchase (Appendix 2) for the supply of the Contract
Products shall be as provided under the terms of this Master
Agreement. Project-specific provisions, including but not
limited to, for instance payment terms, estimates, raw
materials, specific directions and terms of dispatch etc. shall
be agreed in the respective Purchase Orders. General
business terms of Supplier shall not be accepted. Any other
general terms of contract deviating from this Master
Agreement shall only become part of the contract if both
parties explicitly agree in writing that they shall prevail over
this Master Agreement.
3. Purchase Orders
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Both the Parties hereto agree that this Master Agreement
does not constitute an undertaking by Bosch to allow the
Supplier to manufacture and supply the Contract Products
contemplated under this Master Agreement. When Bosch is
desirous of obtaining the services of the Supplier, it shall
issue Purchase Orders on the Supplier, detailing out the
requirements and specifications required by it which as per
the terms and conditions of this Master Agreement. The
Purchase Order shall be governed by the terms and
conditions of this Master Agreement and in case of any
conflict between the terms and condition of this Agreement
and the terms and condition of the Purchase Orders, the
terms and conditions of this Agreement shall prevail.
Further, any terms and conditions in the Purchase Order
which is in addition to the terms and conditions of the
Master Agreement, shall be read in conjunction with the
Master Agreement.
The Supplier shall within three (3) days of receiving the
Purchase Orders confirm to Bosch in writing as to whether
it has accepted or rejected the Purchase Orders. If such
confirmation from the Supplier is not received within the
days mentioned above, the Purchase Order and all terms
and conditions therein shall be deemed to have been
accepted by the Supplier. Once the Purchase Orders is
confirmed, the Suppler will have no authority under any
circumstances whatsoever to cancel such Purchase Orders.
If, however, the Supplier cancel a confirmed Purchase
Orders, after confirmation, then notwithstanding anything
contained under clause 16, Bosch shall have the right to
terminate this Agreement immediately without prejudice to
any of its rights under this Master Agreement.
4. Quality
4.1. With regard to quality, the Bosch Quality Assurance
Guidelines for Suppliers (QSL1) Appendix 1 and any change
made, therein from time to time shall apply to the Supplier.
4.2. The quality of the Contract Products shall correspond to
the product specifications as detailed as per the Purchase
Order.
4.3. The Supplier shall provide Bosch with all the information
necessary for quality assurance, and shall enable Bosch
quality-assurance officer to gain an insight into its own
quality-assurance at any time.
4.4. In the interest of quality assurance, the Supplier shall
manufacture the Contract Products by itself. The shift of the
manufacturing of the Contract Products (i.e, the change of
location of its manufacture and/or the transfer of
manufacturing to a sub-contractor), requires previous
written confirmation by Bosch. Bosch will not accept
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products delivered from other plants unless previously
informed and agreed to by BOSCH.
4.5. The first delivery of a Contract Product requires the
technical release by the Bosch quality assurance according to
the Bosch regulations. The product requirements will be
fixed individually in accordance with the Bosch quality
assurance.
4.6. The Supplier shall ensure that all materials used for the
production are in accordance with the legal and security-
relevant conditions for restricted, poisonous and dangerous
materials. The Supplier shall observe all legal conditions, e.g.
environmental protection, fire protection etc. for products
that are supplied to BOSCH.
4.7. BOSCH shall at all times be entitled to have the Contract
Products manufactured hereunder examined, inspected and
tested or caused to be examined, inspected and tested for
quality control including self certification by the Supplier and
in case BOSCH exercises such right that the Supplier shall
not dispatch Contract Products unless they are so
examined, inspected, tested or self certified for quality and
found to be conforming to the standards and specifications,
supplier shall adhere to such terms and conditions and
satisfy the same. If the Supplier fails to satisfy the conditions
specified under this Agreement, then, notwithstanding
anything contained under any of the terms and conditions of
this Agreement, Bosch shall have the right to reject such
goods and the Supplier shall be liable to indemnify and keep
Indemnified Bosch for any loss or damages that Bosch may
suffer due to such cancellation.
5. Warranty Period, Collaboration in Case of Complaints
5.1. The Supplier warrants that the Contract Products shall be fit
for the stated use/application. Bosch relies on the expertise
of the Supplier for the merchantability and fitness of the
Contract Products for the stated use/application.
In case of rejection of the Contract Products by Bosch for
reasons aforementioned, the Supplier undertakes to replace
the same, free of cost.
5.2. The Supplier undertakes to comply and be bond in
accordance with Bosch's warranty term as agreed and
represented by Bosch to its customers and also undertakes
to rectify/replace free of cost the Contract Products found
defective on account of manufacture and not due to
wrongful usage and wrongful application.
5.3 Notwithstanding the agreed Bosch's warranty term, the
Supplier shall be liable for defects in the Contract Products
at least for a minimum period of 36 (thirty-six) months with
effect from ............... [In case of Automotive, effective from
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the date of commissioning (first registration of the vehicle)].
In case there are limitation periods in excess of this
provided by statute or agreed upon, such longer limitation
periods shall apply. (Note: For Non Automotive businesses,
date of manufacture can be filled)
5.4 In the event of complaints, Supplier shall conduct without
delay all examinations appearing necessary and notify
BOSCH of the causes and of measures to remedy such
defects as soon as possible, generally interim action within
24 hours, containment action within 2 calendar days and
final root cause and corrective action within 14 calendar
days. (Or as per Individual QSL Agreement) Supplier shall
also collaborate without limitation to detect the causes of
the complaints and in the search for an efficient solution to
the problem, even if the cause of the complaints is disputed
between the parties.
5.5 Bosch shall not be bound to accept the Contract Products
which do not conform to the standards, specifications,
instructions given by Bosch and accepted by the Supplier in
that behalf. In the event of non-compliance with the quality
values respectively agreed or in the event of any other
deterioration in the quality of the Contract Products
supplied which can be evidenced, BOSCH also reserves the
right to suspend in whole or in part the purchase of
quantities for which a binding order has already been placed
until such time as the required quality level is assured again
by Supplier. Supplier cannot derive any claims against
BOSCH from such suspension.
8. Prices
The terms of payment and prices agreed in each respective
Purchase Order are - subject to Sections-10 binding for all
of the Contract Products supplied within the Purchase
Order validity period.
The Supplier and Bosch agree that the commercial terms
and conditions of supply, prices, discounts, credit period,
etc., shall be such as the Supplier and Bosch may mutually
agree from time to time and as may be specified in the
respective Purchase Orders.
15. Cancellation of Binding Orders
Except as otherwise agreed, BOSCH may cancel, without
being subject to. compensation, if the cancellation is made
within 30 days of issuance of the Purchase Order. If,
however, cancellation is made after 30 days of confirmation
of the Purchase Order by the Supplier, BOSCH is obliged to
refund to Supplier all of the costs arising as a result, up to
the amount of the respective expense made till the time of
cancellation, which, despite efforts which can be reasonably
expected, it was provably impossible for Supplier to avoid.
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17. Packaging
17.1. The packaging regulations of BOSCH respectively agreed
shall apply.
17.2. The Supplier shall on behalf of BOSCH affix on the Contract
Products and/or labels and/or packages and/or literature
thereof such trademarks and/or legends and/or logos of
BOSCH and/or Robert Bosch GmbH and in such manner, as
may be specified by BOSCH from time to time. The Supplier
further undertakes that nothing herein contained shall,
during the continuance of or after expiry or earlier
determination of this Agreement, be deemed to give or vest
in the Supplier any right, title, interest or claim in or to the
said trademark or marks and/or legends and/or logos in
respect of which BOSCH (and likewise Bosch) is owner,
registered user or licensed user or is otherwise entitled to
use of the same.
17.3 The Supplier further undertakes that it shall not either by
itself or through any associates use or apply for registration
of any marks, logos or legends which are similar to or
resembling those marks, logos and legends in respect of
which Bosch is owner, registered user or licensed user or is
otherwise entitled to use of the same.
17.4. During the continuance of this Agreement, the Supplier shall
permit BOSCH or its authorised agents and/or
representatives from time to time to enter into and inspect
the place of manufacture, examine the process or method of
manufacture and packaging of the Contract Products.
19. Term and Termination of the Agreement
19.1 This Master Agreement shall continue to be in force unless
it is terminated by either party by giving 6 (six) months'
notice in writing to the other. Notwithstanding the
termination of this Master Agreement, the effectiveness of
the provisions hereof with respect to the Purchase Orders
prior to termination hereof shall continue in force and effect
pending the full processing thereof.
19.2 Furthermore, Supplier has the obligation to manufacture and
supply the Contract Products under the Purchase Orders
still existing at the time of termination, pending the end of
their respective term and to further process them in
accordance with the terms of this Master Agreement.
19.3 In the following cases BOSCH also has the right to
terminate the Master Agreement without notice with
immediate effect:
a. If it becomes apparent that Supplier cannot meet its
obligations pursuant to Section 10.
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b. If the insurance cover agreed under Section 6 lapses for
Supplier
c. If Supplier has payment and liquidity problems or if they
are threatened or if Supplier suspends payments, is illiquid
or over-indebted or if it seems likely that Supplier will
become illiquid or over-indebted.
d. If an application is filed for insolvency or composition
proceedings to be initiated with respect to the assets or
operation of Supplier
19.4 Claims of Supplier for compensation due to contractual
termination by BOSCH according to Section 19.3 are
excluded.
19.5 Notwithstanding the reasons for termination of this
Agreement, all rights and obligations arising from this
Agreement shall continue to remain in force beyond the end
of this Agreement in so far as they relate to and result from
orders which were accepted by the Supplier before the
termination of this Agreement.
10. Analysing various clauses of the aforesaid agreement and
also some of the purchase orders issued by BOSCH, enclosed
with the appeal paper book, it cannot be said that the
transactions between the appellant and BOSCH are not at arm's
length.
11. The argument of the Revenue is that the since the entire
quantity of filter and filter parts manufactured as per the
specifications and designs of Bosch under the said Agreement
and sold to them at an agreed price, the quality control of the
manufactured products under the supervision of BOSCH, also
the raw material procured/purchased by the Appellant from the
vendors approved by BOSCH etc.; thus there is a greater degree
of control exercised by BOSCH on the Appellant, hence the
transaction is not an independent sale and purchase transaction
and also not on principal to principal basis, consequently cannot
be considered to fall under Section 4(1)(a) but under Section
4(1)(b) of the CEA, 1944. The argument of the Appellant on the
other hand is that the raw materials are purchased by them from
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their own funds, converted into finished goods by employing
their own labour, machinery, hence circumstances like affixing
the brand name of BOSCH, manufacturing the finished goods as
per the specification of BOSCH, allowing for quality inspection
before dispatch of the goods, fixing the sale price mutually etc.
cannot make the transaction other than principal to principal
basis. Besides, it is argued that in the event the department of
the view that the Transaction between the appellant and BOSCH
are in the nature of related transaction, then there was no need
to resort to Rule 10A, instead of Rule 9 of Central Excise
valuation Rules, 2000 would have been applied. Also, it is
submitted that since they procure the raw materials themselves
and not supplied free of cost by BOSCH for conversion into
finished goods, the meaning of 'job worker' appended to Rule
10A of the said rules is not satisfied, hence the Appellant cannot
be called a job worker of Bosch, and accordingly Rule 10A of the
Central Excise Valuation Rules,2000 cannot be applicable.
12. The circumstances mentioned above and considered by
the learned Commissioner in the impugned order in confirming
the demand have been analysed by the Tribunal in the case of
Mallya Fine Chem Pvt. Ltd. CCE [Final Order No.20829 - 20854,
20855-20858/2024 dated 10.09.2024]. The facts of the said
case are more or less similar to the present one. This Tribunal
after analysing the facts and the settled principle of law
observed as follows:-
31. We do not find any unusual condition in the aforesaid
agreement dated 18.05.2007 which would lead to an inference that
it is not on principal to principal basis but that of a Principal and an
agent. In an usual course of business transaction both seller and
buyer come together, negotiate the price and if acceptable,
translate their conditions to a written contract and later executes
the contract, in its letter and spirit. Therefore, existence of a
mutual agreement in the sale and purchase of goods cannot be
considered that the agreed price is a tainted one since the goods
are not sold in force wholesale market. If such an interpretation is
adopted, all the tailor made goods will fail the test of transaction
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value as the goods would not be purchased by any one else except
the person who ordered for such goods.
32. In the above agreement, under Clause 1 it is stipulated that
MFCPL shall manufacture and supply the product according to
formulations, specifications and quality furnished by IFFL from time
to time and the quantity of the products to be supplied shall be
determined by mutual agreement in writing. Clause 2 stipulates that
all the raw materials and packing materials would be purchased in
accordance with specifications and quality by IFFL and MFCPL and
shall maintain necessary record of analytical data of raw materials.
Clause 3 of the said agreement stipulates that MFCPL shall test
samples of all products supplied to IFFL and ensure it is conformed
to the specifications prescribed by IFFL. In Clause 4.3, it is
stipulated that MFCPL shall not sell the products whether packed
or otherwise which has been rejected the IFFL, bearing the
company's trademark, copyright and / or design. However, MFCPL
may sell the products to third party with the prior consent of IFFL.
Under Clause 7, it is stipulated that IFFL shall pay MFCPL the prices
listed in Appendix 2 for the product duly packed and supplied on
outright sale basis and the price is exclusive of excise duty and sales
/ VAT and other costs, charges, taxes duties etc. Central Excise
duty and Sales /VAT as applicable shall be paid by MFCPL and
charged to IFFL. It is mentioned at Clause 11 that the agreement
will be on principal to principal basis and does not bar parties from
entering into similar agreements with any other persons. Under
Clause 12, it is further mentioned that either part can terminate the
contract without assigning any reason after giving 3 months prior
notice in writing to other part. This agreement has been
interpreted by the Revenue being an agreement influenced by the
purchaser on the seller whereby MFCPL could not sell the products
to others and the right to sell the rejected goods also not vested
with MFCPL. The Commissioner in the impugned Order concluded
that the stringent conditions of the agreement indicates that MFCPL
was prevented from putting up FCP in the ordinary course of
business or trade which is of critical importance to ascertain
whether sale is not in ordinary course of trade or business in the
light of definition of 'sale and 'purchase' under section 2(h) of
CEA,1944; hence the price cannot be considered to be at arm's
length. In our opinion, the meaning of 'sale' and 'purchase' as
prescribed under section 2(h) has been provided a very narrow and
pedantic meaning in the context of determination of assessable
value under section 4 of CEA,1944 which has been amended from
time to time to encompass more than one wholesale transaction
based on the circumstances and commercial expediency. The
Hon'ble Supreme Court in the case of CCE, Nagpur Vs. Universal
Ferro & Allied Chemicals Ltd. [2020(372) ELT SC (14)] held that a
liberal meaning of the definition of 'sale' and 'purchase' be given in
the context of Central Excise Act,1944 observed as:
"18. We shall first deal with the submission of Shri K.
Radhakrishnan, Learned Senior Counsel appearing for the
Revenue, to the effect that since in the transaction between
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UFAC and TISCO there is no transfer of property in goods, the
same cannot be termed as 'sale' and therefore would not be
covered under paragraph 9.9(b) of the EXIM Policy. Shri
Radhakrishnan, in that respect, would rely on the provisions of
the Sale of Goods Act, 1930.
19. We do not find any merit in the submission of Shri
Radhakrishnan in this regard. It will be relevant to note that clause
(h) of Section 2 of the Central Excise Act, 1944 specifically defines
the terms 'sale' and 'purchase'. Section 2(h) of the Act reads thus
:
"2(h) "sale" and "purchase", with their grammatical variations
and cognate expressions, 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;"
..............................................................................
......
23. It is also equally well-settled that the first principle of interpretation of plain and literal interpretation has to be adhered to. We are therefore of the considered view, that the narrower scope of the term 'sale' as found in the Sale of Goods Act, 1930 cannot be applied in the present case. The term 'sale' and 'purchase' under the Central Excise Act, 1944, if construed literally, it would give a wider scope and also include transfer of possession for valuable consideration under the definition of the term"
33. The Ld. Commissioner observed that the price at which MFCPL sells the products to IFFL is ultimately sold by IFFL to wholesale dealers at a price ranging from 1.89 to 2.74 times of their purchase price; the photographs of labels affixed on FCP filled containers demonstrate to the general public that FCP is manufactured and packed by MFCPL for IFFL as all indications or relationship such as brand, logo, trade mark, design etc.; also the customers were notified to contact IFFL for consumer complaints, which clearly showed that the products were made for and on behalf of IFFL by MFCPL. Consequently, she has concluded that the intricate business relationship between IFFL and MFCPL reflects interest in each other's business and one influences the other and hence there is existence of mutuality of business interest between MFCPL and IFFL and accordingly the sale by MFCPL to IFFL is not a true sale. Consequently, MFCPL and IFFL are to be treated as related persons in terms of Section 4(3)(b)(iv) of CEA, 1944.
34. We do not find merit in the reasoning of the Commissioner and also the argument advanced by the Revenue during the course of hearing that the conditions stipulated mutually by MFCPL and IFFL indicate that the agreement is not entered into free market business scenario. It is a settled principle of law that selling the entire manufactured goods to IFFL under a commercial contract after packing and affixing the brand name of IFFL as per the conditions of the contract would not make MFCPL a related person of IFFL nor it could be construed that there is mutuality of business Page 21 of 24 E/22290, 22543/2014, E/20537, 20556/2015, E/20884, 20885/2018 & E/20771-20772/2023 beyond the precinct of commercial relation other than that of buyer and seller. This principle has been laid down by the Tribunal in Eastern Bakeries Pvt. Ltd's case & TTK Health care Ltd.'s case(supra). In this premises, rejection of the agreement considering the MFPCL and IFFL not on principal to principal, in absence of any evidence to show that the relationship between appellant MFCPL and IFFL is tainted with extra commercial relationship like free flow of finance, control through share holding, etc. influence the price mutually agreed alleging that price is not the commercial price and hence the price at which the goods sold by IFFL be relevant for determination of value is not sustainable.
35. In the show cause Notice, it is alleged comparing both the Agreements dated 07.1.2004 and 18.5.2007 that the conditions continued to be more or less the same and hence the relation between MFPCL and IFFL continued to be Principal and Job worker; however, the learned Commissioner in her finding held that Rule 10A of the CEVR, 2000 is not applicable to the present case and confirmed the differential demand of duty short paid adopting the sale price of IFFL resorting to Rule 11 read with Rule 9 considering the relationship between MFCPL and IFFL as that of 'related person'. In our view, the said approach of the adjudicating authority cannot be sustained as there is no evidence brought on record to establish mutuality of relation or satisfaction of any of the ingredients of the definition of related person under Section 4 (3)(b) of the CEA, 1944. Also, the present proceeding has been initiated after insertion of Rule 10A of CEVR and there has been no allegation under earlier Agreement dated 07.1.2004 that the transaction between MFPCL and IFFL was influenced by their relationship as defined under Section 4(3)(b)(iv) of CEA,1944, hence the price at which FCP supplied by MFPCL to IFFL to be ignored and the assessment of FCP be made at the price at which IFFL sold the goods in the market be adopted. Therefore, in absence of any additional evidence indicating the transaction between MFPCL and IFFL under the agreement 18.5.2007 fall within the definition of 'related person', rejecting the 'Transaction Value between MFPCL and IFFL is contrary to the settled principles of valuation of goods;
hence cannot be sustained.
36. The judgments heavily relied upon by the learned Special Counsel viz. Nutri Foods and S.Kumar's case, are in a different set of facts and circumstances and hence cannot not be made applicable to the facts of the case in hand.
37. In Nutri Food's case there are three parties involved, namely, M/s Anand Food, a partnership firm engaged in manufacturing various food colours, soup powder, etc. M/s Nutri Foods engaged in packing the products manufactured in bulk by Anand foods, M/s All seasons Foods Limited, a public company is the purchaser of the products, owner of the brand name "All seasons" used on the products. M/s Anand foods gave an authorization to Nutri Foods to manufacture(packing in unit containers) the products on their behalf and to comply with the Page 22 of 24 E/22290, 22543/2014, E/20537, 20556/2015, E/20884, 20885/2018 & E/20771-20772/2023 procedural formalities under the Central Excise and Salt Act and the rules made their under in respect of the goods manufactured on their behalf and also to furnish information relating to the price at which they would sell the goods to M/s All Season Foods Ltd. in order to enable determination of value of the goods under Section 4 of the said Act. The authorization was given in accordance with Notification No.305/77 dated 5.11.1977. Consequently, Nutri foods filed pricelist declaring the price of the goods at which it would be sold by Anand foods to M/s All Seasons. The Asst. Commissioner rejected the pricelist observing that the price of the product had not been declared correctly taking into consideration the agreement entered into between M/s Anand Foods and M/s All seasons. He has observed that the selling price of the goods was determined jointly and also All seasons shall be responsible for payment of freight charges, insurance etc., for the transportation of bulk products from the factory of Anand foods located at Nashik to Bombay i.e. to the factory of Nutri foods for re-packing; it is concluded that the dealing between Anand Food and All seasons are not principal to principal basis and the price at which All seasons sells the product be relevant for determination of value of the goods. The Tribunal after analysing the facts and the agreements between Anand Foods and All Seasons, endorsing the view of the lower authorities that in the agreements, there was no mention that the goods manufactured by Anand Foods would be sent for the purpose of packing to Nutri Foods at Bombay, whereas actually by a letter dated 05.10.1988 from Anand Foods to Nutri Foods, certain arrangements have been formalised which indicated that Anand Foods were to supply finished products in bulk quantities along with all packing materials such as PET bottles, labels, cartons, shrink sleeves, caps, gum tapes, glue and Nutri Foods is liable to get the bottles filled, capped, shrink sleeved, gum taped, batch coded, labelled and cartooned. The loading and unloading of all raw materials and finished products from the truck to the factory premises were to be borne by the Nutri Foods. In these circumstances the Tribunal came to the conclusion that in this arrangement, the freight charges, packing charges etc. being not included in the declared price; therefore rejected the price charged by Nutri Foods to Anand Foods as normal price and directed to reassess the value after making necessary deductions from the price and remanded the matter to the lower authorities. No such circumstances in the present case exist and hence, the said judgment is not applicable.
38. In S. Kumars Ltd.'s case, the merchant manufacturers who had supplied grey fabrics for processing to the respondent No.1, were firms and companies having common management and control under S. Kumars group of companies(also respondents), were selling grey fabrics to the respondent no 1 who after processing the fabrics sold the processed fabrics to other respondents belonging to the same group company which were later sold to independent dealers. In the said circumstances, their Lordships observed that the judgment of Ujagar Prints' case would not apply to Respondent No 1 the processor, who is not an independent entity Page 23 of 24 E/22290, 22543/2014, E/20537, 20556/2015, E/20884, 20885/2018 & E/20771-20772/2023 and as in that case, the merchant manufacturers and the purchasing traders were merely extensions of the processor; the processor is not a mere processor but also a merchant manufacturer who purchases/ manufacturers the raw materials, processes it and sells it himself in the wholesale market. In such a situation, the profit is not of a processor but of a merchant manufacturer and a trader. Their Lordships held that even the judgments delivered in the case of Ujagar Prints case and Empire Industries case would not be applicable to case where the dealings are not at arm's length. In the present case, the appellants have been assessed to duty by determining assessable value following the principle laid down in Ujagar Prints case prior to 01.04.2007, without any allegation of extra commercial relationship between MFCPL and IFFL. Also, both MFCPL and IFFL do not belong to the same Management. Therefore, the said judgment is also not applicable to the present case.
39. In view of the above, the transaction value entered between MFCPL and IFFL be accepted for assessment of FCPs cleared to IFFL and not the value computed under Rule 11 read with Rule 9 of CEVR, 2000, as held in the impugned Order; consequently, the demand of duty confirmed as short paid calculated on the differential value at which appellant MFCPL sold products to IFFL and the price at which IFFL sold the products to customers, during the period in question, cannot be sustained.
13. Following the aforesaid judgment, we do not find any reason to not follow the same which is applicable to the facts of the present case. Consequently, the impugned order is set aside and the appeals are allowed with consequential relief, if any, as per law.
(Order pronounced in open court on 04.11.2025) (D.M. MISRA) MEMBER (JUDICIAL) (PULLELA NAGESWARA RAO) MEMBER (TECHNICAL) Raja...
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