Custom, Excise & Service Tax Tribunal
The Central Arecanut And Cocoa ... vs Commissioner Of Central Excise And ... on 21 July, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/2329/2011-DB [Arising out of Order-in-Appeal No. 39/2010 dated 18/01/2010 passed by the Commissioner of Central Excise, Mangalore.] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes THE CENTRAL ARECANUT AND COCOA MARKETING AND PROCESSING CO-OPERATIVE LTD (CAMPCO) KEMMIJE, PUTTUR 57 8/1, CENTURY COURT, KASTHURI ESTATE 2ND STREET, POES GARDEN, CHENNAI 600 086 Appellant(s) Versus Commissioner of Central Excise and Service Tax MANGALORE 7TH FLOOR, TRADE CENTRE, BUNTS HOSTEL RD., MANGALORE, - 575003 KARNATAKA Respondent(s)
Appearance:
Ms. L.MAITHILI, Advocate CENTURY COURT,8/1, GROUND FLOOR, 2ND STREET.
CHENNAI - 600086 TAMILNADU For the Appellant Mr. S. K. Singh, Commissioner (AR) For the Respondent Date of Hearing: 21/07/2015 Date of Decision: 21/07/2015 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER Final Order No. 21670 / 2015 Per : ARCHANA WADHWA After hearing both the sides duly represented by Ms. L. Maithili, Advocate for the appellant and Mr. S. K. Singh, Commissioner (AR) for the Revenue, we find that the appellant is engaged in the manufacture of bulk chocolates and chocolate materials, on job work basis for M/s. Nestle as also for M/s. Cadbury. The raw material is being supplied by the principal manufacture and after the receipt of the bulk chocolate the same is consumed by the principal in the manufacture of the final product i.e., chocolates. The appellant was clearing the said bulk chocolates on payment of duty of excise by adopting the assessable value in accordance with the Ujagar Prints formula laid down by the Honble Supreme Court. In other words, the assessable value was being arrived at on the basis of the cost of raw materials plus the manufacturing cost as also by adding the margin of profit.
2. Revenue entertained a view that appellant should have adopted the assessable value in terms of Provisions of Rule 10A(iii) of Central Excise Valuation Rules, 2000 as the said Rule was introduced in the Budget of 2007. During the adjudication, the original adjudicating authority upheld the Revenues stand that the provisions of Rule 10A(iii) would apply. Inasmuch as the said Rule allows determination of the assessable value based upon the earlier Rules i.e., from Rule 1 to 9 of the Central Excise (Valuation) Rules, he adopted the provisions of Rule 8 which allows adoption of assessable value on the basis of 110% of the cost of the product.
2.1 On appeal before Commissioner (A), he upheld the applicability of Rule 8 but remanded the matter for re-adjudication on the basis of CAS4 principle.
Hence the present appeal.
3. Learned advocate appearing for the appellant has strongly contested the said view of the Revenue on the ground that Rule 8 is inapplicable to the facts of the present case. The same would apply when a manufacturer is not selling the product but is using the same either captively in his own factory or in the production of other articles, on his behalf. In the present case, the applicant is neither selling the final product manufactured by them nor is the same being used by him either in his factory or on his behalf, in any other factory. For the above proposition, she has relied upon the various decisions of the Tribunal as also the decision of the Honble Supreme Court.
4. On the other hand, learned Commissioner (AR) has brought to our notice the fact that the appellant has not contested the price adopted on the basis of 110% of the manufacturing cost in case where the bulk chocolates is being cleared by them to M/s. Cadbury. As such, they should adopt the same price for clearance of the same product to M/s. Nestle, in terms of the provisions of Rule 4 of the Central Excise Valuation Rules.
5. In her rejoinder, learned advocate submits that they were doing the job work for M/s. Nestle as also for M/s. Cadbury. At the time of dispute raised by the Revenue M/s. Cadbury agreed to adopt the assessable value in terms of Rule 8 and agreed to pay the Central Excise duty accordingly. It is in these circumstances, the appellant adopted the assessable value in terms of Rule 8, in respect of job work done for M/s. Cadbury, even though the said Rule is not applicable to the facts of the case. As regards the supplies made to M/s. Nestle, they are disputing the issue inasmuch as M/s. Nestle has not agreed to pay the central excise duty to the appellant at a higher assessable value. She submits that clearance of goods at the higher central excise value in the case of M/s. Cadbury would not debar the appellant from contesting the applicability of Rule 8 to the job work done on behalf of M/s. Nestle, inasmuch as there is no concept of clearance of comparable goods, in the new rules, which was there in the erstwhile valuation rules. As such she submits that it is the legal issue which requires to be decided.
6. As Regards the applicability of Rule 4, she submits that the same is applicable only when the assessable goods are being sold by the manufacturing unit and has no applicability when the goods are being manufactured on job work basis.
7. We have applied our mind to the legal issue in the present appeal. Though the appellants are only contesting the supplies made to M/s. Nestle and are paying duty on the higher assessable value in respect of supplies made to M/s. Cadbury, the said fact itself will not act as an estoppel to apply the correct law so as to arrive at the correct assessable value. Tribunal in the case of Advance Surfactants India Ltd.: 2011 (274) E.L.T. 261 (Tri.-Bang.) has considered an identical position and has held that in the case of manufacture of goods on job work basis neither Rule 10A(iii) nor Rule 8 of the Central Excise Valuation Rules, 2000 would have any applicability and the goods have to be assessed to duty in terms of Ujagar Prints formula. To the same effect is another decision of the Tribunal in the case of Glamour Tin Industries Pvt. Ltd. vs. CCE, Thane: 2014-TIOL-1612-CESTAT-MUM. Tribunals decisions in the case of Indian Extrusions vs. CCE, Mumbai: 2012 (283) E.L.T. 209 (Tri.-Mum.) can also be referred to. The said decision of the Tribunal in the case of Advance Surfactants India Pvt. Ltd. (supra) stands confirmed by the Honble Supreme Court, when the appeal filed by the Revenue was rejected as reported in 2013-TIOL-07-SC-CX.
7.1 Inasmuch as the issue is decided, we find no favour with the Revenues stand of adopting Rule 8. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief. However, we make it clear that as per the statement of the learned advocate they are not contesting the supplies made to M/s. Cadbury in the present case and as such, our order relate to only job work for M/s. Nestle. We also make is clear that inasmuch as the Revenue has not expressed any doubts about the correctness of the value adopted in terms of Ujagar Prints formula, we are not going into the correctness of the same. The said value so disclosed by the appellant, for future, can be verified by the Revenue if they so deem fit.
In a nutshell the appeal is allowed with consequential relief and the impugned order is set aside.
(Order pronounced in open court) ASHOK KUMAR ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER rv 2