COMMR. OF C. EX. Vs. RECLAMATION WELDING LTD.

JUDGEMENT

(1.) THIS appeal has been filed by the Revenue for setting aside the OIO No. 18/COMMR/2006, dated 15 -2 -2006 passed by the Commissioner of Central Excise & Customs Ahmedabad. Under the OIO dated 15 -2 -2006 adjudicating authority has discharged the show cause notice issued to the respondent. Brief facts of the case are that respondent M/s. Reclamation Welding Ltd., Odhav, Ahmedabad were engaged in the manufacture of various grades of castings out of raw materials supplied by M/s. AIA. Respondent took Cenvat credit of the input supplied and castings were supplied back to M/s. AIA on payment of duty.

(2.) DR . Jeetesh Nagori (AR) appearing on behalf of the Revenue argued that assessable value in such cases should be based on the raw material cost plus job charges plus profit of the job worker as per settled position of law. That appellant has paid duty on a lower value than the actual cost of the goods as per the cost accountant's certificate. It was also his case that supplier of the raw materials is a subsidiary company of the assessee falling within the scope of related person as per Section 4 of the Central Excise Act, 1944. That valuation of the goods was thus required to be done as per Section 4(1)(b) of Central Excise Act, 1944 read with Rule 8 of Central Excise Valuation Rules, 2000. That job worker's profit was required to be added to the assessable value as per Apex Court's judgment in the case of M/s. Ujjagar Prints ( : 1989 (39) E.L.T. 493 (S.C.)) and M/s. Pawan Biscuits Co. (P) Ltd. ( : 2000 (120) E.L.T. 24 (S.C.)).

(3.) HEARD both sides and perused the case records. The issue involved in the present case is regarding valuation of goods manufactured by the respondent on job work for M/s. AIA Engineering. As per the judgments of Hon'ble Apex Court in the case of Ujjagar Prints (supra) and Pawan Biscuits (supra) the valuation of goods manufactured in the case of a job worker has to be based on the cost of the raw materials supplied plus the job charges which also include the profit of the job worker. That is what has been clarified by the CBEC vide Circular No. 619/10/2002 -CX, dated 19 -2 -2002 and respondent has correctly paid duty. No evidence has been introduced by the Revenue as to how job worker and the raw material supplier are related persons for the purpose of attracting Rule 8 of the Central Excise Valuation Rules, 2000. Even if any additional duty was payable the same was also available as credit to the recipient of goods. It is an exercise entirely covered by the concept of revenue neutrality, as per the case laws relied upon by the respondent. Secondly, in the event of credit being admissible to the recipient of the same group of companies it cannot be held that there could be any intention on the part of the respondent to evade payment of duty and accordingly extended period is not attracted in the present demands. In view of the above observations appeal filed by the Revenue is rejected and the cross -objection filed by the respondent is allowed.