CCE Vs. RAVISHANKAR INDUSTRIES PVT. LTD.

JUDGEMENT

(1.) THE Respondents acted as job -workers for M/s. KODAC India Ltd., Chennai (KODAC for short), for manufacture of Unexposed Cinematography Colour Polyester Positive Films. The raw material was supplied by KODAC and KODAC also paid job -work charges to the respondent. The respondents were paying excise duty on the manufactured products as per provisions in Notification 36/2001 -CE (NT) dated 26/06/2001. KODAC furnished a cost construction certificate w.e.f. 19 -09 -2000 showing an assessable value of Rs. 5.69 per linear meter of the film after deducting a loss of 0.27 per liner meter toward loss incurred by M/s. KODAC and respondent was paying duty based on assessable value of Rs. 5.69 per meter.

(2.) REVENUE was of the view that excise duty should be paid on the cost of manufacture of the film by respondent and not based on the selling price of KODAC which involves a loss of Rs. 0.27 per linear meter. Based on such reasoning a show cause notice was issued for the period Jul 01 to Nov 01. The adjudicating authority dropped the demand on the ground that the provisions of Notification 36/2001 -CE (NT) would imply that excise duty is to be paid on the price at which KODAC was selling the goods and the cost certificate furnished by KODAC was not really required for deciding the assessable value. Revenue filed an appeal with Commissioner (Appeal) against this decision arguing that the trader's loss cannot be a factor to be taken into account while determining the manufacturing cost of goods which should be the assessable value in the hands of the job -worker. Commissioner (Appeal) rejected the appeal filed by Revenue based on the argument that the Central Excise Valuation Rules, 2000 do not have a specific rule to deal with valuation of goods manufactured on job -work basis and having regard to Rule 11 and the general principles of valuation in the said rules it is proper to accept the sale price of KODAC as assessable value of the respondent though the sale price involved some loss to KODAC. Aggrieved by the order of the Commissioner (Appeal) Revenue has filed this appeal.

(3.) THE Ld. A.R. for Revenue argues that the notification of CENTRAL EXCISE VALUATION (DETERMINATION OF PRICE OF EXCISABLE GOODS) RULES, 2000 did not change the situation in any way because the Rules did not make any special provisions with regard to valuation of goods in the hands of the job worker. The principles embodied in the said rules are in conformity with the principles laid down in the decision of Ujagar Prints (Supra). He argued that the fact that the person who was getting the goods manufactured were selling the goods at a loss cannot affect the assessable value of the goods in the hands of the job -worker and hence the deduction allowed from cost towards loss made by KODAC is not legal and orders of the lower authorities are wrong and need to be reversed. The Ld. A.R. also invited our attention to CBEC's Circular 619/10/2002 -CX dated 19 -02 -2002 which clarified that value in such case is to be determined based on the principles laid down in the decision of Ujagar Prints.