- (1.) The Appellant/Revenue is in appeal and the challenge is to the final order dated 18-6-2003 [: 2003 (156) E.L.T. 618 (Tri.-Mum.)] passed by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT), West Zonal at Mumbai. Before the CEGAT, the Respondent herein had preferred an appeal against the demand in respect of Excise duty which appeal has been allowed by the CEGAT and Excise demand is quashed. The Respondent is engaged in the manufacture of motor vehicle parts from the raw material supplied by the customers of the goods on labour charges basis. In essence, thus, the Respondent undertakes the job work. After the manufacturing of the motor vehicle parts, the same are supplied to the customers who had placed the orders for the job work. The customers to whom the motor vehicle parts are supplied are used by those customers in the manufacture of motor vehicles on which full Excise duty is paid. While arriving at the value of the motor vehicle on which the duty is to be paid, the cost of such motor vehicle parts is included. Therefore, to this extent it is not in dispute that ultimately the manufacturer of the motor vehicle pays the Excise duty on the motor vehicle parts which are manufactured by the Respondent on undertaking the aforesaid job work.
(2.) The question before us, in the present appeal, is as to whether Rule 8 of the Central Excise (Valuation) Rules, 2000 (hereinafter referred to as 'the Rules') or Rule 11 thereof would apply in arriving at the valuation of the goods at the end of the Respondent/Assessee. As per the Appellant/Department Rule 8 is applicable and therefore, the value has to be 115% of the cost of production. Rule 8 reads as under: "RULE 8: Where the excisable goods are not sold by the Assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods."
(3.) On the face of it Rule 8 will have no application to the facts of the present case. It is rightly pointed out by the CEGAT that for the applicability of this Rule two requirements are to be fulfilled. The first is that the excisable goods that the Assessee manufactures are not sold by him and the second requirement is that these goods must be used for consumption either by him or on his behalf in the production or manufacture of other articles. In the present case, first condition is undoubtedly satisfied as the goods are not sold by the Respondent. However, second condition is not at all met or fulfilled inasmuch as the goods are not used by the Assessee for consumption either by him or on his behalf in the production or manufacture of other articles. As stated above, these goods are supplied to the manufacturer of the motor vehicles.;