Custom, Excise & Service Tax Tribunal
E Mox Device Company vs Pondicherry on 30 September, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Excise Appeal No. 41926 of 2017
(Arising out of Order-in-Appeal Nos. 263&264/2017(CXA-II) dated 22.05.2017 passed by
Commissioner of Central Excise (Appeals-II), No. 26/1, Mahatma Gandhi Marg,
Nungambakkam, Chennai - 600 034)
M/s. Smith Enterprises ...Appellant
A-3, 8th Cross, Pipdic Industrial Estate,
Mettupalayam, Thattanchavady,
Puducherry - 605 009.
Versus
Commissioner of GST and Central Excise ...Respondent
Puducherry Commissionerate,
No. 1, Goubert Avenue,
Puducherry - 605 001.
And
Excise Appeal No. 41927 of 2017
(Arising out of Order-in-Appeal Nos. 263&264/2017(CXA-II) dated 22.05.2017 passed by
Commissioner of Central Excise (Appeals-II), No. 26/1, Mahatma Gandhi Marg,
Nungambakkam, Chennai - 600 034)
M/s. E-Mox Device Company ...Appellant
R.S.No. 112/4&8,
Sedarapet Industrial Area,
Sedarapet,
Puducherry - 605 111.
Versus
Commissioner of GST and Central Excise ...Respondent
Puducherry Commissionerate,
No. 1, Goubert Avenue,
Puducherry - 605 001.
APPEARANCE:
For the Appellants : Mr. G. Krishnamoorthy, Advocate
For the Respondent : Ms. G. Krupa, Authorised Representative
CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER Nos. 41079-41080 / 2025
DATE OF HEARING : 07.08.2025
DATE OF DECISION : 30.09.2025
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Per Mr. VASA SESHAGIRI RAO
Both the Appeals are combined together since
common facts are involved and the common issue that arises
for our consideration is, "whether the Revenue is justified in
demanding duty on the goods manufactured by the
appellants - job workers, in view of the amendment to Rule
10A of the Central Excise Valuation Rules, 2000"?
1.2 Excise Appeals Nos. E/41926 &41927/2017 have
been filed by M/s. Smith Enterprises, Puducherry and M/s. E-
Mox, Pondicherry Respectively (hereinafter referred to as
the 'Appellants') directed against the impugned Orders-in-
Appeal No. 263 & 264 /2017 dated 22.05.2017 passed by
Commissioner of Central Excise (Appeals-II), Chennai who
has upheld the demands confirmed while setting aside the
penalties imposed in Orders-in-Original No. 04/2016 dated
29.07.2016 and No. 05/2016 dated 29.07.2016.
2. Brief facts of the Appeals are that, the
Appellants, manufactured HDPE Plastic Caps on job work
basis, out of the raw materials supplied by M/s. Marico Ltd.
Upon verification by the department, it appeared that the
value adopted by the Appellants by considering the cost of
materials plus conversion cost, was not in accordance with
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Rule 10A (iii) read with Rule 8 of Central Excise Valuation
Rules, 2000 (CEVR) resulting in short payment of duty.
Hence, Show Cause Notices No. 3/2016 dated 21.03.2016,
SCN No 01/2016 dated 06.01.2016 and corrigendum dated
08.02.2016 were issued to the Appellants for the periods
January 2015 to December 2015 and February 2015 to
October 2015, proposing to re-determine the value and
demand differential duties of Rs.3,89,177/- and
Rs.3,67,939/- under Section 11A of the Central Excise Act,
1944 along with applicable interest under Section 11AA of
the CE Act 1944 and to impose penalty under Rule 25 of the
Central Excise Rules, 2002. The Adjudicating Authority vide
Orders-in-Original No. 4/2016 dated 29.07.2016 and
05/2016 dated 29.07.2016, confirmed the demands and
imposed penalties under Rule 25 of Central Excise Rules,
2002 respectively. Being aggrieved, the Appellant preferred
appeals before the Commissioner (Appeals-II) who vide the
impugned order upheld the Orders-in-Original in so far as
demands were concerned but set aside the penalties
imposed by the lower authority. The details are encapsulated
as below:
Sl. Order in Name of the SCN No/date OIO No Amount Period
No. Appeal Appellant demanded
No/date in
impugned
order
(Rs.)
1 263 &264 Smith Enterprise, 03/2016 dt. 04/2016 dt 3,89,177 Jan 2015
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E/41926&41927/2017
/2017 dated Puducherry 21.03.16 29.07.2016 to
22.05.2017 Dec2015
2 263 &264 E-MOX, 01/2016 dt. 05/2016 dt 3,67,939 Feb 2015
/2017 dated Puducherry 06.01.16 and 29.07.2016 to Oct
22.05.2017 corrigendum 2015
dt.
08.02.2016
3. Aggrieved, the Appellants have come before this
forum.
4. The Grounds of Appeal filed by the Appellant
have been specified below: -
i. It was submitted that Rule 8 of CEVR could not be
applied when the Appellant had not captively consumed
the goods as it was the principal manufacturer who
gets such goods manufactured on his behalf by the
Appellant.
ii. It was averred that the assessable value in respect of
job work was to be determined based on the cost of
manufacture of the goods and job work charges in view
of the decisions in the case of Ujagar Prints [1989 (39)
ELT 493 (SC)] and M/s. Pawan Biscuits Ltd. [2000
(120) ELT 24 (SC)] which was also suitably clarified by
CBEC in Circular No.619/10/2002-CX dated
19.02.2002.
iii. It was submitted that the impugned order had erred in
relying on CBEC Circular F.No. 6/15/2009-CX dated
31.03.2010 wherein it was clarified that the assessable
value would be determined in terms of sub-rule (iii) of
Rule 10A read with Rule 8 of CEVR by adopting 110%
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of Cost of production of the goods as assessable value,
where the goods manufactured by a job worker was
captively consumed by the principal manufacturer. It
was pointed out that the said Circular was analysed and
examined by the Tribunal in the case of M/s. Advance
Surfactants India Ltd. Vs. CCE, Mangalore [2011 (274)
ELT 261 (Tri.-Bang.)] and it was held that the said
clarification was against the mandate of Rule 8 of CEVR
and hence untenable. The above decision of the
Tribunal was followed in Rolastar Pvt. Ltd. Vs. CCE,
Daman [2012 (276) ELT 87 (Tri.-Ahmd.)] and Indian
Extrusion Vs. CCE, Mumbai [2012 (283) ELT 209 (Tr.i-
Mum)].
iv. The Appellant also pointed out the reliance placed in
the impugned order on the decisions in the case of M/s.
Shivani Detergent Pvt. Ltd. Vs. CCE, Delhi [2013 (296)
ELT 88 (Tri.-Del.) and Hyva (India) Pvt. Ltd. Vs. Union
of India [2015 (327) ELT 41 (Bom.)] was misplaced.
5. The Ld. Counsel Shri G. Krishna Moorthy
representing both the Appellants reiterated the averments in
the grounds of appeal and further submitted that in similar
circumstances in thier own case for earlier period, the
CESTAT Chennai has set aside the demand in Final Order
Nos. 40047 - 40048 / 2025 in the case of M/s.
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E/41926&41927/2017
Smith Enterprises Versus Commissioner of GST and Central
Excise, Puducherry Commissionerate 2025 (1) TMI 422 -
CESTAT CHENNAI and prayed for setting aside the impugned
order. Further reliance was also placed on the ratio of the
Apex Court's decision in the case of CCE Vs. Aqua Pet
Industries [2013-TIOL-07-SC-CX].
6. The Ld. Authorized Representative Ms. G. Krupa,
representing the Department affirmed the findings of the
Lower Appellate Authority and submitted that the Appellant
had not adopted correct valuation in terms of Rule 10A (iii)
read with Rule 8 of CEVR, 2000 and therefore Appellant was
liable to pay differential duty. It was pointed out that the
Appellant had contravened the provisions of CEVR with an
intent to evade duty payment and hence the demands
confirmed are sustainable. Hence it was prayed for dismissal
of the appeals filed by the Appellant.
7. We have carefully considered the submissions
made by both the sides and also evidences available on
records.
8. The only issue which arises for decision in these
appeals is whether the value to be adopted for job worked
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goods was in terms of Rule 10A (iii) read with Rule 8 of
CEVR, 2000?
9. We find that the Appellants have manufactured
HDPE Plastic Caps on job work basis and have paid duty on
the assessable value worked out by taking into account the
cost of materials plus conversion cost. The principal
manufacturer (M/s. Marico) used the caps for fitment onto
bottles, in its factory, for filling coconut oil. The department
therefore contends that after 01.04.2007 the valuation
should be done applying Rule 10A(iii) r/w Rule 8 of Central
Excise Valuation Rules which applies when goods are not
sold. The appellant does not captively consume the goods
nor does M/s. Marico consume it on behalf of appellant. The
very same issue has been considered by this Tribunal in the
case of M/s Smith Enterprises, one of the Appellants vide
Final Order No. 40293-40297/2018 dated 02.02.2018
following the judgement in the case of M/s. Advance
Surfactants India Ltd. Vs CCE, Mangalore [2011 (274) ELT
261 (Tri.-Bang.)], the extracts of which has been reproduced
below: -
"6. The undisputed fact in these cases is the appellant
herein is a job worker manufacturing LABSA for M/s. HUL. It
is also undisputed that HUL gives LAB and the appellant
uses other consumables in the manufacture of LABSA. It is
also undisputed that the appellant has been valuing the said
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LABSA cleared from factory premises, based upon the cost
of material plus processing charges prior to 1-4-2007 when
the provisions of Rule 10A were inserted into the Central
Excise Valuation Rules, 2000. It is also undisputed that the
said LABSA is returned back to M/s. HUL for further
consumption in their factory premises for manufacturing of
soaps and detergents. It is nobody's case that LABSA
consumed by HUL is on behalf of the appellant herein.
7. On these factual matrix we need to appreciate the
provisions under Rule 10A, which is reproduced herein
under:-
"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) 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
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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."
7.1 It can be seen from the above reproduced provisions
that provisions of Rule 10A can be brought into play only
when there is a situation where excisable goods are
produced or manufactured by a job worker on behalf of a
person and cleared to the buyer of the principal and/or
cleared to a depot or a consignment agent. The intention of
the Legislature was to capture the tax on the goods, on the
value of the said goods when cleared to the ultimate
consumers. In the case in hand, we find that provisions of
Rule 10A(i) and (ii) does not arise as has been recorded by
us in the earlier paragraphs. Provisions of rule 10A(iii) gets
attracted which talks about a situation where 10A(i) or (ii)
does not apply. The said provision (iii) very clearly mandate
that in a case not covered under clause (i) or (ii), the
provisions of foregoing rules, wherever applicable shall
mutatis and mutandis apply for determination of value of
the excisable goods. This would indicate that the provisions
of Central Excise Valuation (Determination of Price of
Excisable Goods) Rules, 2000 has to be gone through
serially. It is not the Revenue's case that provisions of Rules
3, 4, 5, 6 and 7 would also apply in this case. Revenue is of
the view that provisions of Rule 8 will apply. In order to
understand the Revenue's case, we reproduce the provisions
of Rule 8.
"RULE 8. Where the excisable goods are not sold
by the assessee but are used for consumption by
him or on his behalf in the production or
manufacture of other articles, the value shall be
[one hundred and ten per cent] of the cost of
production or manufacture of such goods."
7.2 It can be seen from the above reproduced Rule that this
will come into play only when the goods are used for
consumption by the assessee or on his behalf, in the
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production or manufacture of other articles, in such a case
the value shall be 110% of the cost of production or
manufacture of such goods. If this rule needs to be applied
in the case, then it is to be on record that LABSA is a
product of the appellant herein and is consumed by HUL on
appellant's behalf or the said products are consumed by
some other job worker of the appellant, in his factory for
further manufacturing of goods. In the absence of any such
situation, we are of the view that provisions of Rule 8 will
not come into play. As already reproduced herein above, it
is undisputed that LABSA is manufactured by job worker and
cleared to HUL for further consumption and the said LABSA
is the intermediate product required by HUL which is
manufactured or produced by the appellant as a job worker.
The key words in Rule 8 that needs to be interpreted are
'consumption by an assessee or on his behalf' for applying
the said Rule for arriving at valuation or determination of
goods. In the case in hand, it is very clear and not disputed
that the appellant is not consuming the said LABSA nor is it
consumed on his behalf by HUL. In our considered view, the
provisions of Rule 8 will not get attracted in this case.
.....
.....
.....
11. That still leaves us with a question of how the determination of value has to be done as provided under Rule 10A(iii). By elimination of Rule 2 to 10 as they may not apply in a situation like in this case provisions of Rule 11 will apply and Revenue has to take the recourse to provisions of Rule 11 which talks about using reasonable means consistent with the principles and general provisions of these rules read with sub-section (1) of Section 4 of Central Excise Act, 1944. Keeping this in mind, we find that the ratio laid down by the Hon'ble Supreme Court in the case of Ujagar Prints and followed by various other decisions of this Tribunal and accepted by Revenue in their various Circulars 11 E/41926&41927/2017 will squarely apply i.e. to ascertain the assessable value on the cost of materials plus processing charges. In our view, the appellants have been correctly valuating their products by adopting this method.
12. We find that the judgment relied upon by the learned SDR of this Bench in the case of Ultrapack is on a different set of facts i.e. in that case, the 'Ultramarine blue' was sent in bulk form by M/s. Reckitt Benckiser India Ltd. and the said product was repacked by the assessee, for Reckitt Benckiser India Ltd. and hence it was held that Rule 8 will be applicable. It can be seen that in that case, Rule 8 was invoked because it was undisputed that repacking was done on behalf of Reckitt Benckiser India Ltd. which would clearly attract the provisions of Rule 8. The situation in the current appeal before us is totally different which has been set out by us in the earlier paragraphs. In view of this, the decision of this bench in the case of Ultrapack will not be applicable.
13. In the facts and circumstances of the case, in view of the foregoing, we are of the considered view that the impugned orders are unsustainable and are liable to be set aside and we do so. Impugned orders set aside and Appeals allowed."
10. We find that the above decision of the Tribunal was followed in subsequent judgements delivered by the Tribunal in the case of Rolastar Pvt. Ltd. Vs. CCE, Daman [2012 (276) ELT 87 (Tri.-Ahmd.)] which was affirmed by the Hon'ble Supreme Court in [2013 (298) E.L.T. A186 (S.C.)] wherein it was held that: -
"In these appeals, no substantial question of law arises for our consideration. The same are dismissed accordingly." 12
E/41926&41927/2017 The Appellate Tribunal in its impugned order had held that finished product (hollow profiles) manufactured on job work basis were sent back to principal-manufacturer providing raw material and consumed by the principal- manufacturer for further manufacture of final product. Rules 10 and 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 not applicable."
11. We are consciously refraining from burdening this order by reproducing from the wealth of jurisprudence available in this regard to avoid prolixity. It is suffice to note that similar view has been taken earlier by this Tribunal in more or less similar facts and circumstances, and the issue is no longer Res-Integra as can be seen from the above decisions, and also in the decisions in the 3 CASES of the One of the Appellant (Smith Enterprise) by this Tribunal. The Appellant also made additional submissions on 11/08/2025, placing reliance on the following cases: -
i. Bhavani Enterprises, Sree Mukambigai Polymers and Smith Enterprises Order Nos 40293-40297/2018 dated 2/2/2018 ii. Sree Mukambigai Polymers Final Order No 40502/2024 dated 30/4/2024 iii. Indian Extrusion Vs CCE Mumbai -2012 (283) ELT 209 (Tri-Mum) In all the above decisions, it was held that where the finished products manufactured on job work basis ,were sent back to principal-manufacturer providing raw material and consumed by the principal-manufacturer for further manufacture of final product, Rules 10 and 8 of Central Excise Valuation 13 E/41926&41927/2017 (Determination of Price of Excisable Goods) Rules 2000 are not applicable and the question framed by us is answered in favour of the Appellant.
12. 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.
13. Resultantly, we set aside the impugned Orders-
in-Appeal Nos. 263 & 264/2017 dated 22.05.2017 and allow the appeals with consequential benefits if any, as per law.
(Order pronounced in open court on 30.09.2025) Sd/- Sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) MK