TMI Blog2016 (4) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, because those would be post-manufacturing profits. We also find that the first appellate authority has correctly enunciated the law as to the activity of job-work as to how it should be understood and the valuation of the said goods to be done. - Decided against revenue - Appeal No. E/1316/2005 - Final Order No. A/3788/2015-WZB/EB - Dated:- 4-11-2015 - M. V. Ravindran, Member (J) And C J Mathew, Member (T) For the Appellant : Shri S Hasija, Superintendent (AR) For the Respondent : Shri V S Sejpal, Adv ORDER Per M V Ravindran This appeal is filed by the Revenue against Order-in-Appeal No. BR/14 to 15/M-IV/2005 dated 09/02/2005 passed by the Commissioner of Central Excise (Appeals),Mumbai IV. 2. The relevant facts, after filtering out unnecessary details are that the respondent herein is a processor undertaking job-work for one M/s Risha Dyeing Printing Pvt. Ltd. (hereinafter referred to as Risha'). The factory of Risha was closed in September 1998 and they were getting their finished products manufactured on job-work basis form the respondent and the respondent was discharging duty liability based upon the cost of the grey fabrics plus proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and by not including the cost of checking, cutting, packing on behalf of Risha, the declarations filed by the respondent were incorrect and hence extended period was correctly invokable. 4. Learned counsel appearing on behalf of the respondent would draw our attention to the judgment of the Supreme Court's Constitution bench in the case of Ujagar Prints (supra) and submit that the post manufacturing profit of the traders need not be included in the cost, is the law which has been declared by the apex Court for the material period in question and has been followed in the various cases as also in the case in hand. It is his further submission that invoking of the extended period is totally incorrect as the respondent had filed various declarations with the authorities before clearance of the goods from their factory premises. It is also his submission that the extended period need not be invoked in this kind of situation as the law settled by the various judgments, more specifically Pushpam Pharmaceutical Company vs. Collector of C. Excise, Mumbai 1995 (78) ELT 401 (SC); Collector of Central Excise vs. Chemphar Liniments 1989 (40) ELT 267 (SC) and Commissioner of Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing expenses whatever these may be, which will either be included in the price at the factory gate or deemed to be the price at the factory gate for the processed fabric. The factory gate here means the 'deemed' factory gate as if the processed fabric was sold by the processor. In order to explain the position it is made clear by the following illustration: if the value of the grey-cloth in the hands of the processor is ₹ 20/- and the value of the job work done is ₹ 5/- and the manufacturing profit and expenses for the processing be ₹ 75/-, then in such a case the value would be ₹ 30, being the value of the grey-cloth plus the value of the job work done plus manufacturing profit and expenses. That would be the correct assessable-value. 2. If the trader, who entrusts cotton or man-made fabric to the processor for processing on job work basis, would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market, that would be taken by the Excise authorities as the assessable-value of the processed fabric and excise duty would be charged to the processor on that basis provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et as Britannia biscuits. The Tribunal held that M/s. Pawan was an agent of M/s. Britannia and therefore, it is M/s. Britannia's wholesale price which is to be taken into consideration for arriving at the assessable value. But the Hon'ble Supreme Court did not agree. Following Ujagar, the Hon'ble Supreme Court held that the cost of raw materials plus the job worker's cost and profit shall be included not the profit of M/s Britannia or the expenses incurred after the manufacture of the biscuits by the appellant. With the Hon'ble Supreme Court reiterating the position, as of now this is the settled law of the land. Thus, it reveals that the goods at which the processing house sells the goods must be the value of the grey cloth or fabric plus the value of the job work done plus the manufacturing profit and the manufacturing expenses but not any other subsequent profit or expenses. It is necessary to include the processor's expenses, costs and charge plus profit, but it is not necessary to include the trader's profits who gets the fabrics processed, because those would be post-manufacturing profits. 11. We also find that the first appellate authority h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has to be taken as per aforesaid decision and price of the said goods sold by Trader manufacturer will not form the basis, for Central Excise purposes. In the instant case, there is also no case of department that both are related persons in the terms of Section 4 of Central Excise Act, 1944. 16, The value of goods manufactured on job work basis mainly depends upon the following two- (1) Value of raw materials in the hands of job worker. (2) Job charges including profit. And, thus the job worker should declare the above truly for proper valuation of goods. Though for value of raw materials in the hands of job worker, he mainly depends upon his customer who supplies the raw material to him. However, in the case of M/s. S. Kumars Ltd. reported in2000 (117) ELT 439 (T), it was held that valuation of fabrics processed was to be arrived at by adding to cost of grey fabricsm cost of processing and processor's profit; distinction was not to be made between fabrics processed for related persons and others. This has been followed by the Tribunal's larger bench in the case of M/s. Praful Industries Ltd. reported in 2000 (118) ELT 97 (T-LB). This decision h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
