Customs, Excise and Gold Tribunal - Mumbai
Cosme Remedies Ltd. vs Commissioner Of Customs And Central ... on 4 February, 2005
Equivalent citations: 2005(186)ELT338(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. Heard both sides.
2. The issue relates to valuation of excisable goods in the hands of a job worker. Normally one would have thought that the issue is well settled by the Supreme Court in the case of Ujagar Prints - 1989 (39) E.L.T. 493 (S.C.) and Pawan Biscuits - . But no.
3. M/s. CSFL Pharma and M/s. Wallace Pharma are the principal manufacturer who got their P&P medicines through the appellant, Cosme Remedies Ltd. The latter clears the goods on payment of duty calculated on the value arrived on the basis of cost of raw material + manufacturing cost as laid down by the Supreme Court in Ujagar Print's case. The products then are stock transferred on payment of duty to the depots belongings to the principals from where they are sold. The contention of the department is that the price at which the goods are sold from the depots of the principal manufacturers should be the basis of valuation for the purpose of assessment. On this basis differential duty is worked to be Rs. 59,79,217/- and demanded under Section HA of Central Excise Act, read with Rule 9(2) of Central Excise Rules, 1944 an equal amount of penalty is imposed under Section 11AC and interest demanded under Section 11AB. The period in dispute is April 2000 to October 2001. Concept of transaction value for the purpose of assessment was introduced w.e.f. 1-7-2000. The Department holds that the value of the impugned good is determinable under Section 4(1)(b) read with Rule 7 of Valuation Rules.
4. Rule 7 of valuation Rules read with "where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as such other place) from where the excisable goods are to be sold after their clearance from the place of removal the value shall be the normal transaction value of such goods sold from such other places 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 goods under assessment."
5. The Commissioner in the impugned order holds that with the introduction of 'Transaction Value Concept' the statutory position has undergone a charge. According to him a loan licensee/trader is required to give a declaration to the job worker indicating the price at which the goods would be sold by him in the present case no such declaration is given as admitted by the appellant. The Commissioner thereupon holds that the price at which goods are sold by the principal manufacturers should be the basis for determining of the value and since the appellant has not disclosed such price (the price at which the principals sold their goods) he has suppressed vital information rendering himself liable to penalty under Section 11AC.
6. We observe that Section 4(1)(b) and the Valuation Rules come into play only when the value cannot be determined under Section 4(1)(a). The Supreme Court in Ujagar Prints case laid down two important concepts. The factory gate of the job worker is the deemed factory gate and the removal of goods from the premises of the job worker is deemed removal. The value of goods as arrived at by the job worker in accordance with the principles laid down by the Apex Court is the price at which the goods have to be assessed. This concept has not undergone any charge even after introduction of Transaction value concept in 2000. The basis of valuation of goods in the job worker's hands still remains the same. However if the job worker is not considered as a manufacturer for any reason the situation would be different. The department does not hold that the appellant is not a manufacturer. The fact that differential duty is demanded from him is a pointer in this direction.
7. The Commissioners' reliance on Rule 7 of Valuation Rules is also faulty. He seemed to be contending that since the goods are removed on a consignment basis to the depots of the principals, the price at which goods are sold from the depots should be the basis for valuation. We hold that Rule 7 comes into play only when the goods are removed by the manufactured to his own depot. In this case that is not what has happened.
8. Further, if the removal of goods at the factory gate of a job worker constitutes a deemed sale it would also constitute deemed transaction value. It is not the departments' charge that the appellant undervalued the goods because he has not included this or that element while arriving at the value. The department's case is that the price at which goods are sold by the principal should be the basis. In view of what has been laid down by the Supreme Court in Ujagar Prints case we are not able to support this view.
9. The order of the Commissioner is set aside. The appeal is allowed.
(Operative part pronounced in Court)