Full Judgment
As regards scrap value, I find that the quantity of scrap is the total steel used less the weight of the drums delivered by the appellant to their buyers. This quantity is included while arriving at the cost of the drum steel given by the oil companies. The quantity of the scrap steel is valued at the rate of the cost of original plates and is loaded in to the cost of the drums delivered by the appellants. Thus the appellants have added a higher value to the value of the drums towards the value of scrap arising during the process of manufacture.
As regards inward transportation and crane service changes. I find that, these expenses of the appellants is nothing but expenses like any other expenditure of an organization like salaries and wages, maintenance and repairs, administrative charges etc, and same got accounted by the appellant in expenditure account. In short, what is added to the assessable value is the income, irrespective of the expenditure of the appellants. When the gross amount has already been added, there is no need to include the individual items once again, which amounts to double taxation of same elements.
As regards 10% national profit, I find that when duty is paid on cost of raw material as well as the job charges, the question of adding, further profit does not arise as job changes are always inclusive of profit. I rely on following decision of the Hon'ble CEGAT in case of Collector v. Testles Ltd. 1996 (83) ELT 157 where in it has been held that no notional profit on the raw material supplied by the customer's is includible in the assessable value of the manufactured item.
As regards penalty, I find that there is no evasion of duty as alleged in the show cause notice. It is seen that there is no suppression of the facts on part of appellant. When duty demanded is not substantiated no penalty can be imposed. It is well settled in law that the penalty is not imposable unless the appellant has acted in the deliberate deliance of law or acted in conscious disregard, of his obligation under law. There is no allegation in the impugned SCN's not any finding in the said order-in-original's that the appellant have acted in deliberate defiance of law or acted in conscious disregard of their obligation under the law. The imposition of penalty is therefore unwarranted under the fact and circumstances of the case. For this I rely on the following judgements.Hindustan Steel v. State of Orissa 1978 (2) ELT (J-159)SC iii) In case of Prathibha processors v. UOI as reported at iv) In case of CCT, Chandigarh v. Associated Trader 1998 (87) ELT 746 (Tri) The assessable value of the goods manufactured on job work basis is arrived at by including : 1) the cost of raw materials plus other expenses incurred on inward transportation, handling charges (including crane service charges.) etc.
AS per the purchase contracts, it is seen that the cost of transportation of CR coils from the refineries to the assessee's works at Chandivali will be paid to the assessee (processor). This cost is part of the landed cost of the raw material which has to be considered while arriving at the assessable value. Hence the Commissioner (Appeals) conclusion regarding non inclusion of the crane service charges and inward transportation charges is not correct and proper.
As regards the inclusion of value of scrap, it is seen that the normal scrap arising out of end cuttings etc, were to be retained by the assessee. Therefore, this is an additional benefit accruing to the assessee and this is over and above the job work charges and therefore the value of such scrap is includable in the assessable value. Therefore it is seen that the Commissioner (Appeals) has not considered these key factors at the time of allowing the appeal of the assessee. Hence it is prayed that: 3) After hearing both sides & on considering that the Commissioner has found on facts that costs were already included and also by application of Tribunal decisions on the subject. These findings of fact and applicability of Tribunal decisions is not challenged in the grounds taken. We therefore find no merits in the appeal filed to upset the order impugned arrived on facts & by following Tribunals decisions on the subject. Appeal is therefore rejected.