COMMISSIONER OF C. EX., HYDERABAD-IV Vs. ULTRAPACK

JUDGEMENT

(1.) This Revenues appeal is directed against the Order -in -Original No. C.EX. No. 12/2004 dated 14 -9 -2004.

(2.) THE relevant facts that arise for consideration are, that the respondent during the period October 2001 to February 2002 manufacture Robin Blue retail packs on job work basis and it was alleged that there was under valuation as they had not included a margin of 15% on the cost of production of the main raw materials viz Ultramarine Blue in bulk form. The said ultramarine blue in bulk form is cleared by respondents Principal M/s. Reckitt Benckiser India Ltd., on payment of appropriate duty on the cost of production plus 15% margin as provided under Rule 8 of the Central Excise Valuation Rules, 2000. After receipt of the said ultramarine blue in bulk form, respondent repacked the same into retail pack and was discharging duty on clearance of such retail packs by arriving at the value by the formula as is settled by Honble Supreme Court in the case of Ujagar Prints i.e. considering the cost of production in the hand of main raw material supplier i.e. M/s. Reckitt Benckiser India Ltd. and not adding the 15% margin to the said cost of production. Show cause notice was issued demanding differential duty on this 15% margin. Adjudicating Authority after considering the submissions made before dropped the proceedings initiated by the show cause notice.

(3.) LEARNED SDR would submit that the impugned order is not correct. It is her submission that cost of raw material should be the cost at which the respondent received the raw material i.e. the cost of production plus 15% margin. It is her submission that respondent is availing Cenvat credit on -the duty paid on the main raw material and such duty is paid on the value as arrived at by the following provisions of Rule 8 of the Central Excise Valuation Rules, 2000, hence, the raw material cost has to be the cost on which principal raw material supplier is discharging the duty.