- (1.) THIS appeal is filed against the judgment of the Customs, Excise and Service. Tax Appellate Tribunal (in short "cestat"), West Regional Bench at Mumbai dtd. 11/11/2003. In this case the question is whether the value of scrap/waste retained by a job-worker is to be included in the value of the component manufactured by him.
(2.) WE have today in General Engg. Works Vs. CCE delivered a judgment wherein we have held that where the conversion charges/job-work charges get influenced/depressed on account of the job-worker retaining and selling the scrap/waste the value of the scrap/waste has to be included in the value of the component. In this case the contract contains the following terms: "(a) Conversion charges are applicable on CR output waste of CR coils including 1.5% unrolled/semi-rolled material going along with the CR FH coil. The conversion charges are with due consideration of scrap credit after reduction of estimated salvage value. Yield: 95.5% from HR to CR including approximately 1.5% unrolled/semi-rolled material forming part of CR FH coil. The balance material to be retained and disposed of by Lloyds and the value of which has been adjusted in the conversion charges (the value of 1.5% approximately unrolled/semi-rolled material going along with CR FH coil has also been considered in arriving at the revised conversion charges besides the scrap retained and disposed of by Lloyds)."
(3.) THE contract also contains the following clause: "Notes (i) Scrap shall be calculated on an actual basis. Benefit of scrap credit to be passed on to Tata Steel. Accounting for scrap will be on a monthly basis on actual yields achieved but not exceeding yield norms." This clearly indicates that the value of conversion charges is affected by the fact that the respondents retain the scrap and sell it. ;