The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Rule 8 of the Central Excise Valuation Rules, which mandates valuation at 110% of the cost of production, cannot be applied where goods manufactured on job work basis are returned to the principal manufacturer for further manufacture of final products. 

The bench of Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the department could not establish that the principal manufacturer was consuming the goods “on behalf of” the job worker, which is a necessary condition for invoking Rule 8. 

The dispute arose after the department alleged that the assessee, engaged in manufacturing blow moulded HDPE plastic bottle caps on job work basis for Marico Limited, had incorrectly determined the assessable value of the goods. The department contended that since the caps were used by the principal manufacturer in further manufacture, valuation ought to have been done under Rule 10A(iii) read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 by adopting 110% of the cost of production as the assessable value. 

A show cause notice was issued demanding differential excise duty for the period from November 2015 to June 2017 along with interest and penalty. Though the Commissioner (Appeals) dropped the penalty, the duty demand and interest were sustained, leading to the present appeal before the Tribunal. 

Before the Tribunal, the assessee argued that Rule 8 applies only where goods are captively consumed by the assessee or consumed on its behalf. Since the caps manufactured by the appellant were used by Marico and not consumed by the appellant itself or on its behalf, Rule 8 could not be invoked. The assessee also relied upon an earlier CESTAT decision in its own case where the same issue had already been decided in its favour. 

The Tribunal examined the scope of Rule 10A and Rule 8 in detail and reiterated that Rule 8 becomes applicable only when the excisable goods are used for consumption by the assessee or on its behalf in the manufacture of other products. 

Referring to earlier precedents including Advance Surfactants India Ltd., Rolastar Pvt. Ltd., and prior orders involving the same assessee, the Tribunal observed that goods manufactured on job work basis and returned to the principal manufacturer for further manufacture do not attract Rule 8 valuation. 

The Bench noted that the issue was already settled in favour of the assessee and had attained finality as the Revenue failed to show that the earlier order had been overturned or challenged successfully. 

The Bench observed that in such circumstances, valuation based on cost of raw materials plus processing charges, as recognized in the Supreme Court’s decision in Ujagar Prints, would continue to apply. 

The Tribunal set aside the impugned order confirming the duty demand and allowed the appeal with consequential reliefs. 

Case Details

Case Title: E-Mox Device Company Versus Commissioner of GST & Central Excise 

Citation: JURISHOUR-1137-CES-2026(CHE) 

Case No.: Excise Appeal No.41387 of 2018

Date: 05.05.2026

Counsel For  Appellant: G. Krishna Moorthy, Advocate

Counsel For Respondent: N. Satyanarayana, Authorised Representative

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