- (1.) These appeals under Section 35L(b) of the Central Excise Act, 1944 (for short "the Act") are directed against a common final order, dated 2 nd February 2005 in Appeal No. E/5261-62/04-NB(A), passed by the Customs Excise & Service Tax Appellate Tribunal, New Delhi (for short "the Tribunal"). By the impugned order the Tribunal has quashed the additional excise duty demand of Rs.9,34,89,367/- under Section 11A of the Act; penalties of Rs.1.5 crores each on respondent Nos.1 and 2 under Rule 173Q of the Central Excise Rules, 1944 (for short "the 1944 Rules") and Rule 25(1) of the Central Excise Rules, 2001 (for short "the 2001 Rules") read with Section 38A of the Act and a penalty of Rs.2 crores under Rule 209A of the 1944 Rules and Rule 26 of 2001 Rules read with Section 38A of the Act on Respondent No. 2 as confirmed by the Deputy Commissioner of Central Excise.
(2.) Succinctly put, the material facts giving rise to the present appeals are as under: Respondent No.1 M/s Food & Healthcare Specialities (for short "the Assessee") was engaged in the blending and packing of 'Glucon D' for M/s Heinz India Pvt. Ltd. (for short "Heinz"), respondent No.2 in these appeals, pursuant to an agreement commencing from 1 st March 2000. Under the agreement, Heinz was to supply raw material, packing material and the technical know-how to the Assessee for the blending and packing of the said product. From March 2000 to September 2000, the Assessee paid excise duty on the basis of wholesale price of the product at the depots of Heinz. However, for the period commencing from October 2000, they filed price declarations seeking to modify the assessable value of the product as the aggregate of cost of raw material, packing material and their job work charges and started paying duty on the same. During the course of investigations undertaken by the revenue, it was found that the said product was also being processed at the Aligarh factory of Heinz and the duty on those clearances was being paid at the assessable value/depot sale price of Heinz. Consequently, three notices were issued to the Assessee for the period October 2000 to December 2000; January 2001 to June 2001 and July 2001 to February 2002, to show-cause as to why the assessable value declared by them be not rejected and the price declarations submitted by them be not amended by determining the assessable value on the basis of the sale price fixed by Heinz at its depots and the duty so paid be not recovered along with penalty under Rule 173Q of the 1944 Rules. Upon consideration of the cause shown by the Assessee, the Adjudicating Authority, by its order dated 31 st August 2004, confirmed the differential demand indicated in the show cause notices and imposed the aforesaid penalties on the Assessee as also on Heinz. On appeals preferred against the said order, the Tribunal, by an exceptionally short order, set aside the order-in-original, concluding that since the Adjudicating Authority has itself given a specific finding that the status of the Assessee was not better than that of hired labour and Heinz is the manufacturer, the duty is leviable only on the manufacturer. Being aggrieved by the dismissal of its appeal under Section 35G of the Act by the High Court, as not maintainable, the revenue is before us in these appeals.
(3.) Mr. B. Bhattacharyya, learned Additional Solicitor General appearing for the appellant, referring to several clauses of the agreement between the Assessee and Heinz, in particular, clauses (d), (1), (2), (5), (7), (9),(13), (15) and (16), vehemently submitted that the relationship between the Assessee and Heinz was one of principal and agent and not of principal to principal and therefore, the price at which, Heinz sold 'Glocon-D' in the wholesale market must be taken as the assessable value. According to the learned counsel, Heinz had complete control over the activities of the Assessee, who was merely a job worker. To bring home his point that the Assessee was merely an extended arm of Heinz, he laid emphasis on the fact that processed 'GloconD' was stored at the same premises from where Heinz was operating; Heinz had also taken an exemption from registration under Rule 9(2) of the erstwhile Central Excise (No.2) Rules, 2001, in terms of Notification No. 36/2001 dated 26 th June 2001, which was available to a manufacturer who got his goods manufactured on his account from any other person, subject to the condition that the said manufacturer authorised the person, who actually manufactured or fabricated the said goods, to comply with all the procedural formalities under the Act and the rules made thereunder, in respect of the goods manufactured on behalf of the said manufacturer. Relying heavily on the decision of this Court in Commissioner of Central Excise, Indore Vs. S. Kumars Ltd. & Ors., 2005 13 SCC 266 , wherein dealing with the question of assessable value of the processed goods in relation to the processor the earlier decisions of this Court in M/s Ujagar Prints & Ors. (II) Vs. Union of India & Ors., 1989 3 SCC 488 (for short "Ujagar Prints (II)"), M/s Ujagar Prints & Ors. (III) Vs. Union of India & Ors., 1989 3 SCC 531 (for short "Ujagar Prints (III)"), Empire Industries Limited & Ors. Vs. Union of India & Ors., 1985 3 SCC 314 and Pawan Biscuits Co. Pvt. Ltd. Vs. Collector of Central Excise, Patna, 2000 6 SCC 489 , were discussed. Learned counsel argued that the formula laid down in the Ujagar Prints (II) or (III) would not apply to the fact-situation. It was stressed that having failed to examine the relationship between the Assessee and Heinz, the Tribunal's order deserved to be set aside and the matter was fit to be remitted back to the Tribunal for fresh adjudication on the touchstone of the ratio of S. Kumars.;