TMI Blog2017 (3) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise Rules, 1944. 2. The fabric so supplied shrinks during processing and demand was raised on such shrinkage as having not been subject to duty of ₹ 1,72,905 from August 1992 to January 1993 for the following reason It is seen that from April 1994 onwards the assessee was loading 4% to factor the shrinkage. However, prior to that the assessee had not loaded this shrinkage factor while determining the value of the finished fabrics. The value of the finished fabrics was declared for per L. Mtrs and not for entire lot. While determining this per L.Mtr finished fabrics, the cost of grey fabrics per L.Mtr had been considered without loading shrinkage factor. That is the assessee considered the cost of one L.Mtr grey fabric for determining the value of one L.Mtr finished fabric without loading shrinkage factor I.e, assessee has not considered that for manufacturing one L.Mtr finished fabric more than one L.Mtr grey fabric shall be required. Also the assessee has not adduced any documentary evidence to show that the Merchant Manufacturer has declared the cost of grey fabrics after factoring for the shrinkage. It is therefore very clear that the Merchant manufacturer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst them. They are also liable to penalty. To work out the exact amount of differential duty liability on the appellants and the amount of penalty to be imposed on them, I would remand the matter to the original authority. The appellants shall furnish to the adjudicating authority all the relevant data (including the profit margin, if any, of their raw material suppliers) supported by evidence within two months of the receipt of this order and thereafter the said authority shall adjudicate the case de novo on affording a reasonable opportunity of hearing to them. xxxxxx 22.I do not find any merit in the above contention since the observation of the Supreme Court as quoted above would make it clear that the selling price as declared by the trader would include only the price or deemed price at which the processed fabric would leave the factory plus his profit. Therefore, the price of the fabric at the point of its leaving the processor s factory is a relevant factor. While computing the deemed price at the processor s factory gate the value of the grey clothes handed over to the processor has necessarily to be taken into consideration. This is clear from the illustration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11AB of the C.E.A., 1944 was introduced w.e.f. 11-5-2001. Therefore, the interest under Section 11AB of the C.E.A., 1944 cannot be demanded prior to the date of introduction of the date of Section. We find merit in the arguments. Hence the appellants are liable to pay interest w.e.f. 11-5-2001. Appeals are disposed of as indicated above. and in Varma Mukherji Pvt Ltd v. Commissioner of Central Excise, Mumbai-II [2005 (192) ELT 953 (Tri-Mumbai)] 2. None appears? for the appellants in spite of notice. Notice was also sent to their advocates who had withdrawn from the case as seen from letter dated 11-7-2005. Hence, we heard the ld. SDR and perused the records. The issue for determination is as to what are the manufacturing expenses and manufacturing profits which are to be included in the assessable value, besides Value of grey cloth and value of job work done, in respect of fabrics processed on job work basis. The assessable value of the fabrics will be the sum total of - (i) value of the grey cloth at the hands of the processor, (ii) value of the job work done, (iii) manufacturing expenses, and (iv) manufacturing profit. The appellants ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling expenses and selling profit of the trader are not to be included in the assessable values. It is well-settled and there cannot be any dispute that all manufacturing profit accruable in event of sale of fabrics at the gate of processors factory, are includible in the assessable values and so I hold. The appellants contentions in this regard are, thus, not acceptable to me. The impugned order, on the basis of?11. positive material, specifically proposed to make addition of 12.00% on account of manufacturing expenses and manufacturing profits and break-up along with elements of manufacturing expenses and profits are also specified. The appellants, contention that Asstt. Commissioner had no jurisdiction or power to determine quantum of grey transportation cost, expenses for octroi duty, cost towards shrinkage element, manufacturing expenses, manufacturing profit, etc. are untenable. The values in the circumstances as in this case, are determinable under Central Excise Valuation Rules, 1975 and Rule 7 thereof provides for determination of value by Asstt. Commissioner according to his best judgment and having regard among other things, to any one or more of the methods provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CX. 4, dated 27-5-94. The second ground on which the ld. Commissioner has proceeded is that the they had used mechanical and chemical processes by which they achieved the shrinkage parameters and the item can be considered as shrink-proof material. It is seen from Page 123 of the paper book which a test result certified by the department, the test result has been submitted by the Joint Director of Customs Laboratory, Custom House, Chennai to the Asstt. Commissioner of C. Ex., Coimbatore which clearly indicates the analysis results. The report clearly shows that there is expansion and shrinkage in the warp and weft which is more than 1.5% in the specific samples supplied. This evidence along with the evidence of SITRA shows that appellants had not installed the stenter machine which is a requirement for bringing into existence a shrink-proof cotton fabric in terms of judgment rendered in the case of Omkar Textile Mills (P) Ltd. (supra). The ld. Commissioner has attempted to distinguish this judgment of the Tribunal, which is confirmed by the Apex Court, solely on the ground that shrinkage can be achieved through mechanical and chemical processes. This finding is a perverse finding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 28-11-2000. He has noted that the later show cause notices rely only on the statement of customers. He has also noted that in all the statements, they requested the appellants to process the cotton fabric according to their requirement within the parameters laid down. However, during examination they had retracted their statements. He has noted that the department did not produce any evidence to show that the samples taken for analysis of composition of fabrics and percentage of residual shrinkage of processed fabric. He also noted that department also failed to prove that the fabric processed by the appellants is marked or marketed as shrink-proof fabric . He has also noted that department has not proved by any record/evidence that the fabrics processed in their compressive shrinking machine has controlled the shrinkage to the extent to be called as shrink proof fabric in terms of Board s F. No. 15/110/64-CX. 1, dated 27-4-1964. Therefore, in these circumstances, he has held that, it has to be construed that the process has not imparted any lasting character into the fabric. Therefore the exemption under Notification Nos. 5/99, 6/2000 is eligible to them. He has held that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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