BBM Heavy Machinery Private Limited Vs Commissioner of GST & Central Excise (CESTAT Mumbai)
Whether the department apply Rule 10A and treat the appellant as a job worker for valuation purposes?
The appellant manufacture heavy machinery/equipment. Business is run by a joint venture (JV); agreement dated 19.07.2011 entered into with M/s SMS Meer India Limited, an Indian company and M/s Officine Meccaniche BBM SPA, Italy. The department alleged that appellants had manufactured final products out of certain raw materials supplied by M/s SMS, but failed to pay the central excise duty on the the price at which the principal manufacturer sold the goods under Rule 10A of the Central Excise Valuation Rules. Demand of over Rs.1.05 crores along with interest and equivalent penalty was confirmed. Appellate authority upheld such confirmation. Hence, appeal before Tribunal.
Hon’ble CESTAT, Mumbai set aside the orders and allowed the appeal. It held: (i) though the appellant and M/s SMS are “interconnected undertakings”; the valuation cannot be done under Rule 9; as other conditions are not satisfied; (ii) the Revenue has failed to lead in evidence that the appellant was a “job worker” to invoke Rule 10A of the Valuation Rules; (iii) central excise duty was paid on value including value of free issue material and sales tax was paid thereon; evidencing purchase and sale transaction; (iv) relies on decisions of Tribunal in the case of Nilkamal; Ramsons Casing; and Poona Bottling (affirmed by Supreme Court).
