By TIOL News Service

MUMBAI, NOV 15, 2017: THE appellant cleared "Acconex" falling under Chapter 38.24 in bulk packs on payment of CE Duty and under the cover of excise invoice to M/s. Abhijit Enterprises, Thane , for packing, re-packing, labeling and re-labeling.

M/s. Abhijit Enterprises carried out such processes as job worker. They are a small-scale unit and not registered as Central Excise assessee. After carrying out necessary packing re-packing, labeling and re-labeling activities, the re-packed goods were cleared from its premises to various customers of the appellant on the basis of challan-cum-invoices on behalf of the appellant without payment of Central Excise duty.

The case of the department is that the cost incurred on account of packing material used for packing from bulk pack to retail pack at job-worker's end and the job work charges should be added in the assessable value of the goods cleared by the appellant.

Accordingly, a differential duty demand was raised on the appellant and confirmed by the original authority and upheld by the Commissioner(A).

The appellant is before the CESTAT.

It is submitted that the appellants hadalready discharged the duty on the value at which it was ultimately charged for sale of the packed goods cleared from the job-workers place to the customers and, therefore, no further duty demand alleging undervaluation can arise.

A sample copy of invoice raised by the appellant to the job-worker and value shown therein and also sale invoice or the challan issued by the job-worker to the customers was produced as evidence before the CESTAT. Inasmuch as the value shown in both the invoices was the same and, therefore, no additional amount was either charged or recovered against the sale of the same goods, the appellant contended.

Moreover, since the activity carried out by the job-worker of packing, re-packing, labeling, re-labeling tantamount to manufacture as per Chapter Note 5 of Chapter 38, the demand, if any,should have been raised against the job-worker and not from the appellant, the appellant added.

The AR reiterated the findings in the impugned order.

The Bench observed -

"4. … We find that the demand was confirmed on the cost of packing material as well as job charges for packing activities at the job worker's end. We find that there is no dispute that the appellant while clearing the goods in bulk paid the duty on the value which is the sale value charged to the ultimate customer even after packing of the goods at the job-workers end. Therefore, duty was discharged on the transaction value which was charged to the ultimate customer. In such a situation any cost before sale of the goods clearly stands included in the overall transaction value charged to the customers. Therefore, even though there is a cost at the job-workers end in respect of packing material and packing activities, the same cannot be loaded further on the transaction value and cannot be demanded duty there upon. In this fact, we are of the clear view that the duty discharged by the appellant on the ultimate sale value is correct and legal, accordingly, no further addition should be made. Accordingly, no differential duty demand arises…."

In fine, the impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-4006-CESTAT-MUM)