Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/Case Law /2016-17/3280

Assessable value of the medicaments manufactured by the loan licensee.

Case:- INTAS PHARMACEUTICALS LTD. VERSUS COMMR. OF C. EX. & S.T., AHMEDABAD-II
 
Citation:- 2016 (338) E.L.T. 422 (Tri. - Ahmd.)
 
Brief Facts:- The relevant facts of the case, in brief, are that M/s. Intas Pharmaceuticals Ltd. (for short ‘M/s. IPL’) supplied the raw material to the loan licencee/job workers, who are the co-appellants in the present appeals, for manufacturing Medicaments which is a proprietary medicine classifiable under Chapter Heading 30.03 of Central Excise Tariff Act, 1985. The said job workers/loan licencee paid duty on the basis of formula prescribed by the Hon’ble Supreme Court in the case of M/s. Ujagar Prints - 1988 (38)E.L.T.535 (S.C.).They have paid the duty on the cost of raw materials and conversion charges. There is no dispute that prior to 1-3-2003, the job workers were paying duty on the basis of sale price of M/s. IPL. After 1-3-2003, the job workers started paying duty on the basis of M/s. Ujagar Prints, following the Board’s circular dated 19-2-2002.
A show cause notice dated 28-9-2007 was issued by the Additional Director General, DGCEI, New Delhi to the appellants proposing the demand of Central Excise Duty of Rs. 5,33,948.00 along with interest and to impose penalty on M/s. IPL. It has also proposed to impose the penalties on other appellants i.e. job workers. By the Adjudication order, the Commissioner of Central Excise confirmed the demand of duty along with interest and imposed penalty of equal amount of duty on M/s. IPL and also appropriated the amount as deposited by them during Investigation. There are further penalties imposed on the co-appellants/job workers.
 
 
Appellant’s Contentions:-The learned Advocate on behalf of the appellants contested the demand of duty along with interest and penalty on jurisdiction, limitation and merit. He submits that the issue involved in this case is already decided by the Hon’ble Supreme Court in favour of the appellant in case of Commissioner of Central Excise, Goa v. M/s. Cosme Farma Laboratories Ltd. dated 7-4-2015 in Civil Appeal No. 1761 of 2007[2015 (318)E.L.T.545 (S.C.)].He further submits that the Tribunal in case of M/s. Cosme Remedies Ltd. v. Commissioner of Central Excise, Goa - 2006 (203)E.L.T.567 (Tri.-Bom.)on the identical issue, allowed the appeal of the assessee. The appellant produced the Tribunal order before the Adjudicating authority. It is submitted that the Adjudicating authority observed that the Revenue already filed appeal before Hon’ble Supreme Court. The Adjudicating authority proceeded on the basis of minority view in the said decision. He also drew the attention of the Bench to the relevant portion of the Adjudication order to establish that the fact of the case in the case of M/s. Cosme Farma Laboratories Ltd. (supra) and the present appeals are identical. He submitted that there is no suppression of facts with intent to evade payment of duty. It is further contended that the Adjudicating authority has no jurisdiction to decide the matter in respect of the various job workers situated in different States of the country. Alternatively, the proceedings should be initiated against the various job workers who are the manufacturers of the goods, as per the provisions prior to 1-3-2003. He filed the compilation of case laws.
 
 
Respondent’s Contentions:-Authorised Representative for the Revenue submits that Hon’ble Supreme Court in the case of Cosme Farma Laboratories Ltd. (supra) allowed the appeal of the assessee after examining the agreement and the factual findings of the Tribunal, which is not applicable in the present case. It is submitted that in the present case, it is evident from the record that M/s. IPL provided raw material, supervisory staff, hired the premises and control over the job workers. He further submits that the Adjudicating authority has not only proceeded on the basis of decision of Cosme Farma Laboratories Ltd. He has also discussed the other decision of Hon’ble High Court on the identical issue in the case of Indica v. U.O.I. - 1990 (50)E.L.T.210 (Guj.).He also drew the attention of the Bench to the relevant portion of the Adjudication order and other decisions.
 
Reasoning Of Judgement-After hearing both the sides and on perusal of the records, we find that the issue is no more res integra in view of the decision of Hon’ble Supreme Court in the case of Cosme Farma Laboratories Ltd. (supra). We find that on the identical issue, the Tribunal in the case of Cosme Remedies Ltd. by majority decision held as under :-
As regards“28. the view taken by learned Member (Technical) and Member (Judicial), I find that the agreement between the loan licensee and the job worker is very clear that the supervision and control will be that of the job worker only and as in every job work, the manufacture has to be carried out as per the price indicated by the raw material supplier and as per the specifications laid down by the raw material supplier and the raw material supplier has a right to inspect and draw samples at each stage to ensure that the standards prescribed by him are being followed especially so in the case of drugs where he ultimately has to be held liable for any deficiency in quality where the human lives are involved. No evidence has been brought out to show that the premises had been hired on a shift basis or otherwise and on the contrary, the agreement clearly shows that the manufacturing charges will be paid at the rate specified in the Schedule on the basis of per unit and there is no reference to payment on the basis of any shift or any particular period. The agreement may be at variance with the undertaking given to the Drug Licensing Authorities but there is no evidence that the agreement has been departed with and that the payments were not being made as per the agreement or that the entire supervision was that of the raw material supplier. I am, therefore, of the view that the matter is fully covered by the Larger Bench decision of the Tribunal in the Lupin Laboratories case cited supra and followed in subsequent judgments by the Tribunal. I am therefore in agreement with the views expressed by learned Member (Technical) Shri S.S. Sekhon. The reference is accordingly answered that appeals are to be allowed as held by Member (Technical).”
In the impugned order, theCommissioner observed that though by majority, it was held by the Tribunal that the actual processor of the goods was the manufacturer and that the duty demanded on the price at which the raw material supplier sold the goods, was not sustainable, the Department has filed a Civil Appeal before Hon’ble Supreme Court. The Adjudicating authority proceeded on the basis of the minority view of the said decision. We find that the Hon’ble Supreme Court upheld the majority view in the case of M/s. Cosme Farma Laboratories Ltd. (supra). It has been held as under :-
Once it has“23. been determined that the job workers are the manufacturers, the assessable value of the goods would be a sum total of cost of raw material, labour charges and profit of the job workers, as per Circular No. 619/10/2002-CX, dated 19-2-2002 and the law laid down by this Court in the case of Pawan Biscuits (supra) and other cases. In such a case, the price at which the respondent brand owner sells its goods would not be the assessable value because the duty is to be paid at the stage at which the goods are manufactured and not at the stage when the goods are sold.”
We find that the facts of the present case are identical to the case of Cosme Farma Laboratories Ltd. (supra). Hence, the impugned order passed by the Commissioner cannot be sustained and accordingly it is set aside. All the appeals filed by the appellants are allowed with consequential relief. As the appeal is allowed on merit, we are not going into the issue of limitation and jurisdiction.
 
Decision:-Appeal allowed.
 
Comment:- The crux of the case is that after 01.03.2003, the valuation of goods cleared by job worker is to be done on the basis of decision given in the case of M/s. Ujagar Prints - 1988 (38)E.L.T.535 (S.C.). being value of raw material plus job charges.
 
Prepared By- Tushar Gupta
 
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com