CHOKSI CONTACTS (P) LTD. Vs. CCE JAIPUR

JUDGEMENT

(1.) The issue for decision in this appeal is what is the value of raw material that is to be added by a job worker to arrive at the assessable value of goods. According to the appellants, it is the cost of raw material contained in the finished goods, while according to the department, the cost of raw material utilised on the manufacture of finished goods is to be added. The demand for short levy of Rs. 3,07,015/ - for the period 1993 -94 to 1997 -98 was confirmed by the Additional Commissioner who also ordered recovery of interest in terms of Section 11AB and imposed penalty under Section 11AC of the Cental Excise Act., equal to the duty amount. The Commissioner (Appeals) upheld the order of the Adjudicating authority; hence this appeal.

(2.) Heard Shri K.K. Anand, Ld. Adv. and Shri P.K. Jain Ld. SDR. The cost of raw material contained in the finished goods is to be added to arrive at the assessable value of the final product, namely, Electrical Contacts and other articles made of Precious and Semi -precious metals. They have paid duty amount even prior to the issue of the adjudication order. Thus the dispute before us is liability to interest and penalty. The penalty is challenged on the ground that appellant was under bonafide belief that cost of raw material contained in finished goods was required to be added. However, this bonafide belief is not substantiated by them. On the other hand, law laid down by the Hon'ble Supreme Court in the case of Ms Ujagar Prints 1989 (36) ELT 439 is to the effect that cost of raw material utilised in the manufacture of finished goods is to be added by the job worker to arrive at assessable value. Extended period of limitation is also available to the department since the appellants did not file any price list/price declaration nor did they indicate to Excise Authorities that they will be paying duty by adding only the value of raw material to actually contained in the finished products. Hence interest levied and penalty imposed are sustainable. However, we see force in the submission of the Ld. counsel that interest on penalty can be levied and imposed only for the period subsequent to 28.9.96, when Section 11AB and Section 11AC were introduced in the statute. Hence we hold that interest and penalty are to be re -quantified for the period post 28.9.96 and for this purpose we remand the case to the jurisdictional Assistant Commissioner, while up -holding the duty demand. Appeal is thus partly allowed.