Custom, Excise & Service Tax Tribunal
M/S. Electrical Manufacturing Co. Ltd vs Commissioner Of Central Excise on 10 April, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. III Excise Appeal No. 1028 & 1541 of 2005 Date of Hearing/decision : 10.04.2013 For approval and signature: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Rakesh Kumar, Member (Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Excise Appeal No. 1028 of 2005 [Arising out of Order-In-Appeal No. 555/CE/APPL/KNP/04 dated 1.10.2004 passed by Commissioner of Central Excise, Kanpur ] M/s. Electrical Manufacturing Co. Ltd. Appellants Vs. Commissioner of Central Excise Respondent
Kanpur Excise Appeal No. 1541 of 2005 [Arising out of Order-In-Appeal No. 655/CE/APPL/KNP/04 dated 31.12.2004 passed by Commissioner of Central Excise, Kanpur ] M/s. EMC Steels Ltd. Appellants Vs. Commissioner of Central Excise Respondent Allahabad Appearance:
Shri L.P. Asthana, Advocate for the Appellants R.K. Mathur, AR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Rakesh Kumar, Member (Technical) Date of Hearing/decision : 10.04.2013 ORDER NO .FO/ 56109-56110/2013-Ex(Br) Per Archana Wadhwa (for the Bench):
After having heard both sides duly represented by Shri L P Ashtana, learned advocate for the appellant and Shri Mathur learned DR for revenue in respect of both the appeals, we find that M/s. Indian Aluminum Co. Ltd. (hereinafter referred to as INDAL) had entered into a contract with M/s. Powergrid Corporation of India for supply of ACSR Moose conductor at the rate of Rs. 1,08,000/- per km and M/s. INDAL further gave the contract to manufacture the said goods to one M/s. Electric Manufacturing Company Kolkatta, who further entrusted the work to manufacture the said goods to the present appellant M/s. Electric Manufacturing Co. Ltd. Allahabad with the consent of M/s. INDAL.
2. The appellant availed the Cenvat credit of duty paid on the inputs received directly from INDAL and discharged the duty on the assessable value of the product in terms of principal laid down by the Honble Supreme Court in Ujjagar Prints. There is no dispute on the above fact.
3. It is seen that while entering into the contract with M/s. Powergrid Corporation with M/s. INDAL Kolkata, they were given an advance of Rs.3,75,45,200/-. In addition amount of Rs.1,06,000/- approx. were given to the M/.s INDAL for special test charges for conducting the above test on the goods before delivery of the same.
4. Revenues contention is that such advance received by M/s. INDAL from M/s. Powergrid Corporation of India are required to be added in the assessable value of the contractors in the hands of present appellant. Accordingly, proceedings were initiated resulting in confirmation of demand and imposition of penalties. In addition, penalty of Rs. One lakh was imposed on M/s. Electric Manufacturing Company, Kolkata.
5. There is no dispute about the facts. Admittedly the advance was received by M/s. INDAL from M/s. Powergrid Corporation. Further, the goods do not stand manufactured by M/s. INDAL. As a result of subsequent arrangement, the goods were got manufactured from the present appellant on job work basis. Admittedly, the present appellant has discharged its duty liability on the assessable value arrived at on the basis of cost of raw material plus conversion charges, which includes their margin of profit. The addition of the advance amount received by M/s. INDAL from M/s. Powergrid Corporation in the hands of present appellant, who is only the job worker, cannot be said to be in accordance with the law. Firstly, the said amount was never received by the appellant and secondly the Revenue has not shown that on account of receipt of said advance by M/s. INDAL the assessable value in the hands of present appellant gets depressed. It is well settled law that for adding notional interest on advance received from the customers, Revenue has to establish that the assessable value get depressed on account of such receipt of advance. One such reference can be made to Honble Supreme Court decision in the case of Commissioner of Central Excise, Mumbai vs. ISPL Industries Ltd. [2003 (154) ELT 3 (SC)]. In any case, the advance having not been received by the present appellant, we really fail to understand and appreciate the Revenues stand of addition of notional interest on the same in the value of the goods manufactured by the present appellant on job work basis. Similarly, the test charges received by M/s. INDAL, from M/s. Powergrid Corporation of India, for conducting the special tests before delivery of the goods, cannot be said to have any relation with the manufacture of the same in the hands of the appellant.
6. In view of the foregoing discussions, we find no merits in the stand of the Revenue. Accordingly, the impugned order is set aside and both the appeals are allowed.
(Pronounced in the open court)
( Archana Wadhwa ) Member(Judicial)
( Rakesh Kumar ) Member(Technical)
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