Custom, Excise & Service Tax Tribunal
Smith Enterprises vs Pondicherry on 19 March, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Excise Appeal No. 40942 of 2017
(Arising out of Order-in-Appeal No.57 & 58 (CXA-II) both dated
08.02.2017 passed by Commissioner of Central Excise (Appeals-II),
26/1, Mahatma Gandhi Marg, Nungambakkam, Chennai-600 034)
M/s.Smith Enterprises .... Appellant
A-3, 8th Cross, Pipdic Industrial Estate,
Mettupalayam,
Thattanchavady,
Pudhcherry 605 009.
VERSUS
The Commissioner of GST &
Central Excise, ... Respondent
No.1, Goubert Avenue, Puducherry 605 001.
WITH Excise Appeal No. 40952 of 2017 (Arising out of Order-in-Appeal No.57 & 58 (CXA-II) both dated 08.02.2017 passed by Commissioner of Central Excise (Appeals-II), 26/1, Mahatma Gandhi Marg, Nungambakkam, Chennai-600 034) M/s.Sree Mookambikai Polymers .... Appellant Plot No.A26, Industrial Estate, Mettupalayam, Puducherry 605 009.
VERSUS
The Commissioner of GST &
Central Excise, ... Respondent
No.1, Goubert Avenue,
Puducherry 605 001.
2
APPEARANCE :
Shri G. Krishnamoorthy, Advocate for the Appellant Shri Harendra Singh Pal, Authorized Representative for the Respondent CORAM :
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL) FINAL ORDER Nos.40389-40390/2025 DATE OF HEARING : 19.03.2025 DATE OF DECISION : 19.03.2025 Per: Shri P. Dinesha The common issue that arises for our consideration in both these appeals, since common facts are involved, is, "whether the Revenue is justified in demanding duty by allowing the valuation of the goods manufactured by the appellant - job worker, in view of the amendment to Rule 10A of the Central Excise Valuation Rules, 2000"?
2. Facts of the case as available in the impounded OIA are considered since apparently, there is no dispute insofar as the facts are concerned. The common facts of the case are that the Appellants are manufacturers of HDPE Bottles falling under Chapter 39 of the Central Excise Tariff. During the disputed period, the Appellants had manufactured excisable goods as a job work out of raw materials supplied by the principal manufacturer namely M/s.Marico Ltd., Puducherry and removed the same to M/s.Marico, by availing SSI exemption upto a value of Rs.150 lakhs. The 3 appellant had informed the Department that they had cross the exemption limit of Rs.150 lakhs and started paying full rate of duty. During verification of records, it was observed that the Appellants had adopted assessable value based on the cost certificate issued by M/s.Marico ltd. However, it appeared that the value adopted by the Appellant had not been correctly determined in accordance with Rule 10A (iii) read with Rule 8 of Central Excise Valuation Rules, 2000 as applicable to goods manufactured on job work basis and used by the principal manufacturer in the manufacture of other goods. Thus, it appeared that this resulted in undervaluation and consequential short payment of duty.
Hence two SCNs both dated 06.07.2010 for the period 2009-2010 were issued proposing to recover the duty amounts along with interest. After due process of law, the Adjudicating Authority vide Orders-in-Original both dated 31.08.2010 confirmed the entire duty demands and also imposed penalties.
3. Aggrieved by the above Orders of Adjudicating Authority, the Appellants had filed appeals before First Appellate Authority, on the grounds that the valuation has to be done under Rule 11 of Valuation Rules and not under Rule 8 and that accordingly, the valuation has to be done on the basis of the formula laid down by the Hon'ble Supreme Court in the case of Ujagar Prints Vs UOI (1989 (39) ELT 493 (SC).
44. After due process of law, the then Commissioner (Appeals) vide Orders-in-Appeal 85/2013 (P)(PD) and 87/2013 (P) (PD) both dated 11.02.2013 had ordered the Appellants to pay pre-deposit. However, since the Appellants had failed to pay the ordered amount of pre-deposit, the appeals were automatically dismissed for non-compliance in terms of Section 35F of the Central Excise, Act, 1944. Aggrieved, the Appellants preferred further appeals in CESTAT and the CESTAT remanded the case back to the Commissioner (Appeals) vide Final Order Nos.40303/2016 and 40305/2016 both dated 22.02.2016 to decide the case on merits since the appellants had paid the mandatory predeposit before Tribunal. Accordingly, vide the impugned Orders-in-Appeal No. 57 & 58 (CXA-II) both dated 08.02.2017, the Commissioner (Appeals) upheld the demand of duty made in the OIOs along with interest and set aside the penalties. Hence these appeals before Tribunal.
5. The facts not in dispute are that the Appellants had been engaged by M/s.Marico Ltd. (hereinafter referred to as the Principal Manufacturer) for the purpose of job work and the Appellants had manufactured the impugned goods out of the raw materials supplied by the principal manufacturer. The appellants had cleared the goods to the principal manufacturer who in turn had captively consumed the goods for further manufacture. The appellants had adopted the value comprising the cost of materials used and conversion charges following the principles laid down by the Apex Court in the case of Ujagar Prints Ltd.
56. Admittedly, the FAA has applied Rule 10(A)(iii) in the case on hand to hold that the valuation as prescribed thereunder would apply for determination of the value of the excisable goods. He thus upholds the demand of duty, but however, penalties imposed by the original authority in respect of both the appeals are set aside. The appellant here-in has challenged the duty demand confirmed against them, while the revenue has accepted the deletion of penalties on these appellants.
7. Sri G. Krishnamoorthy, Ld. Advocate appeared for the appellants and Sri Harendra Singh Pal, Ld. Assistant Commissioner, defended the impugned order. Ld. Advocate drew our attention to the orders of this very Bench in respect of the very same appellants, though orders passed separately, wherein, the very same issue has been addressed to and after following other orders of the Coordinate Benches, the impugned demands were set aside. In the said final orders, following orders/decisions have been followed :
1) Pearl Metal Products (Bangalore Pvt. Ltd.) Vs CCE Bangalore - Final Order No.20198 /2025 dt. 13.02.2025 in Central Excise Appeal No.3364 of 2012.
2) Advance Surfactants India Ltd. Vs. CCE, 2011 (274) ELT 261 (Tri.-Bang.) affirmed by the Hon'ble Supreme Court as reported in 2013-TIOL-07-SC-CX
3) Rolastar Pvt. Ltd. Vs. CCE - 2012 (276) ELT 87 (Tri.-
Ahmd.) affirmed by the Hon'ble Supreme Court as reported in 2013-TIOL-07-SC-CX 6 (4) CCE Vs. Malters and Blenders India Pvt. Ltd. - 2018- TIOL-296-CESTAT-DEL affirmed by the Hon'ble Supreme Court as reported in 2019 (367) ELT A14 (SC) (5) Bhavani Enterprises Vs. CCE, 2018-TIOL-2532-CESTAT- MAD.
(6) The Central Arecanut and Cocoa Marketing and Processing Cooperative Ltd. Vs. CCE - 2015-TIOL-2963- CESTAT-Bang.
(7) Indian Extrusions Vs. CCE, 2012 (286) ELT 209 (Tri.- Mum.) (8) CCE Vs. Reclamation Welding Ltd. - 2014 (308) ELT 542 (Tri.-Ahmd.).
(9) CCE V. Palco Metals Ltd. - 2011 (23) STR 389 (Tri.- Ahmd.) (10) Tara Industries Ltd. V. CCE - 2003 (161) ELT 758 (Tri.- Del.) (11) Universal Starch Chem Allied Ltd. V. CCE - 2017 (358) ELT 279 (Tri.-Mum.)
8. In view of the clear ratio decidendi, we hold that the impugned orders in appeal cannot sustain insofar as the duty demand which is challenged in these appeals is concerned. Resultantly, we set aside the impugned order and allow the appeals with consequential benefits if any, as per law.
(Operative part of the order pronounced in open court) (M. AJIT KUMAR) (P. DINESHA) Member (Technical) Member (Judicial) gs