Custom, Excise & Service Tax Tribunal
Cce Mumbai vs M/S Gupta Soaps on 3 February, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/2753/06 Mum
Arising out of Order-in-Original No. 13/2005 dated 31.10.05 passed by the Commissioner of Central Excise, Mumbai IV
For approval and signature:
Shri. Ashok Jindal, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
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 : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
CCE Mumbai
:
Appellant
Versus
M/s Gupta Soaps
Respondent
Appearance Shri Manish Mohan, SDR for appellant Shri Bharat Raichandani, Advocate For Respondent CORAM:
Shri. Ashok Jindal, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 03.02.11 Date of Decision : 03.02.11 ORDER NO.
Per : P.R. Chandrasekharan The facts of the case in the appeal filed by the department are as follows.
2. M/s. Gupta Soaps (assessee in short) are the manufacturer of toilet soaps and detergents. They are also engaged in the manufacture of branded soaps on behalf of M/s. Wipro Ltd. The assessee had entered into an agreement on 27.10.95 with Wipro Ltd., as per which the entire raw material and packing material were to be supplied by M/s. Wipro Ltd. to the assessee for the manufacture of Wipro brand soaps. The assessee discharged the duty liability on the basis of price declaration based on cost basis under Rule 6(b)ii) of Central Excise Valuation Rules, 1975.
3. The department was of the view that, since M/s. Wipro Ltd., is the brand owner and the entire goods manufactured are to be cleared only to the principal and the assessee had no liberty to sell these goods to any other person and the ownership of the goods remained with the principal through out, the transaction was only a stock transfer and cannot be treated as sale at arms length. The department was of the view that the price at which M/s. Wipro Ltd. sells the product in the market should be the basis for computing the duty liability as per the provisions of Section 4 of the Central Excise Act, 1944. Accordingly, show-cause notices dated 17.5.99, 27.7.99 and 30.3.99 were issued to the assessee demanding duty of Rs.1,07,32,921/- for the clearances made during the period August 98 to February 99 in respect of Wipro brand soaps manufactured by the assessee and cleared to M/s. Wipro Ltd. The case was adjudicated by the Commissioner of Central Excise, Mumbai IV vide order-in-original No. 13/2005 dated 31.10.2005. The assessee contended that in an identical issue relating to M/s. Peal Soap Co., the Tribunal had held that merely because there is no sale between two parties does not render relationship as being one of agent and principal and, therefore, the jobworker has to be treated as a manufacturer and not the brand owner. The said order further held that in the absence of comparable price, provision of Rule 6(b)(ii) of the Valuation Rules would apply. The said order of the Tribunal was affirmed by the Honble Supreme Court in Order dated 16.3.2005. In view of this position, the learned Commissioner dropped the proceedings initiated by the aforesaid three show-cause notices. The department is in appeal against the said order. The grounds of Appeal are the same as mentioned in the show-cause notices.
4. We have carefully considered the matter. In the case of M/s. Pearl Soap Co. CCE 2001 (138) ELT 1317 (Tri.- Mum) this Tribunal has in an identical situation held that the jobworker is to be treated as manufacturer and value has to be determined in terms of Rule 6(b)(ii). The said decision has been affirmed by the Honble Supreme Court also in Civil Appeal No. 95 of 2000 dated 16.3.2005 and dismissed the appeal filed by the department against the Tribunals order. Similarly, in the case of Ultra Lubricants (India) Pvt. Ltd. Vs. CCE 2002 (150) ELT 580 (Tri. Mum) it was held that the relationship between the jobworker and raw material supplier is on principal to principal basis and not of principal and agent. Therefore, the goods manufactured by the jobworker should not be assessed on the resale price of the raw material supplier and the value has to be determined on the costing basis i.e. cost of raw materials, labour charges and profit in accordance with apex courts decision in case of Ujagar Prints 1989 (39) ELT 493 (S.C.). The appeal filed by the department in the said case was also dismissed by the honble apex court. The ratio of these judgements are squarely applicable to the facts of the present case. Accordingly, we do not find any reason to interfere with the order passed by the learned Commissioner and reject the departmental appeal.
(Pronounced in open Court) (Ashok Jindal) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) nsk 4