TMI Blog2019 (2) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... ric. There is no dispute about the fact that duty has been paid by the appellants after determining the assessable value as per trade notice of 31.03.2003. When the total quantum of the grey fabric received has been taken into account while determining the landed cost of grey fabric then the shrinkage factor is part of the total value, and there cannot be further addition to the same. The Adjudicating authority have fallen in error to the extent of addition of the “shrinkage factor” over and above the landed cost of grey fabric as received by the appellants - demand set aside - appeal allowed - decided in favor of appellant. - APPEAL No. E/1310/2010 - A/88309/2018 - Dated:- 3-12-2018 - Mr. S.K. Mohanty, Member (Judicial) And Mr. Sanjiv Srivastava, Member (Technical) Shri Prakash Shah, Advocate, for appellant Shri A.B. Kulgod, Assistant Commissioner (AR), for respondent ORDER Per: Sanjiv Srivastava This Appeal is directed against the Order in Appeal No YDB/194/RGD/ 2010 dated 05.04.2010 of Commissioner Central Excise (Appeals) Mumbai Zone II. By the said order Commissioner (Appeal) has upheld the order of adjudicating authority holding as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,04,749/- debited by M/s. Universal Knitting Mills Pvt. Ltd. against the said demand on 06.12.2007 is ordered to be appropriated against the same. M/s. Unibersal Knitting Mills Pvt. Ltd. are directed to pay the differential amount of ₹ 41,711/- forthwith. (6) Out of the demand of ₹ 2,98,611/- raised vide No.V.Adj/Vikh.Dn./R-02/UKM/CR-19/04 dated 07.03.2005 (for February to March, 2004) the amount of ₹ 1,42,470/- is confirmed on the basis of the working as discussed hereinabove and the amount of ₹ 1,16,222/- debited by M/s. Universal Knitting Mills Pvt. Ltd. against the said demand on 06.12.2007 is ordered to be appropriated against the same. M/s. Unibersal Knitting Mills Pvt. Ltd. are directed to pay the differential amount of ₹ 26,248/- forthwith. (7) Out of the demand of ₹ 2,45,615/- raised vide No.V.Adj/Vikh.Dn./R-02/UKM/CR-2/04 dated 04.05.2005 (for April to 07.07.2004) the amount of ₹ 1,38,639/- is confirmed on the basis of the working as discussed hereinabove and the amount of ₹ 1,22,714/- debited by M/s. Universal Knitting Mills Pvt. Ltd. against the said demand on 06.12.2007 is ordered to be appropriated ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals). Commissioner (Appeals) allowed the appeal and remanded matter back to adjudicating authority for fresh consideration vide his order in appeal No SRK/378/M-II/2007 dated 15.10.2007. 2.4 In remand proceedings adjudicating authority has decided the matter afresh as per the order referred in para 1, supra. Against this order of adjudicating authority appellants filed the appeal before Commissioner (Appeal), which has been dismissed. 2.5 Aggrieved by the order of Commissioner (Appeal), appellant have preferred this appeal before tribunal. 3.1 In their appeal appellants have assailed the order of Commissioner (Appeal) statingi. During the period of dispute i.e. from the 31.03.2003, the valuation of processed fabric was to be done as per Trade Notice No 14/CEX/Textile/(1)/03 dated 31.03.2003 (CBEC Circular No 703/19/2003-CX). As per the said trade notice the duty would be worked out on the value calculated on the basis of the price of inputs i.e. yarn or grey fabrics plus the actual job charges. ii. Appellants submitted the value for determination of the duty was calculated by them following the said trade notice. However lower authorities while adjudicating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n b . Thus in his view the differential duty demanded on the basis of quantity received + 4.2 percent of grey received is not correct in law and needs to be set aside. He also relied upon the following decisions: i. Sidharth Processors [2004 (171) ELT 282 (T)]; ii. Sp[ecial Prints Ltd [2003 (158) ELT 428] iii. Ujjagar Prints [1989 (39) ELT 493 (SC)] iv. Ramkumar Mills Pvt Ltd. [2005 (183) ELT 356 (TLB)] v. Indian Rayon Indus Ltd [2002 (150) ET 388 (T)]. 4.3 Learned Authorized Representative arguing for the revenue submitted that tribunal has in case of Special Prints [1999 (95) ELT 864 (T)] has held that Shrinkage Value needs to be added to determine the assessable value. This decision of the Tribunal has been upheld by the Apex Court as reported at [199 (111) ELT A63 (SC)]. He also submitted the trade notice No 46/2002 dated 18.11.2007 issued by the Mumbai II, The shrinkage of man made fabrics would be taken as the same as was being done earlier i.e. @ 4%. Therefore the shrinkage factor would be 1.042, where the actual shrinkage is significantly higher than the average 4%, the general practice was that the cost was worked out on the basis of actual shrinkage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually selling the goods back to the trader) the duty would be worked out on the value calculated on the basis of the price of the inputs i.e. yarn or grey fabric price plus the actual job charges. Further, as per para 4 of the Trade Notice No 46/Gen/ Valuation (3)/2002 dated 18.11.2002 issued by the Commissioner of Central Excise Mumbai-II, the shrinkage factor in respect of the processed fabrics has to be taken into consideration as part of raw material cost and the actual quantification has to b done as per prevailing practice/ data. The cost of raw material would include all cost incurred for bringing the raw material to the premises of the job workers. The prevailing practice as referred in the above trade notice was described in the Trade Notice No 65/2002 dated 30.09.2002 issued by the Commissioner of Central Excise Mumbai-IV when the average shrinkage was taken as 4% and as such, the shrinkage factor was allowed to be taken as 1.042. However, it was also made clear in the said trade notice that where the actual shrinkage is significantly higher that the average of 4%, the general practice of working out the cost on the basis of actual shrinkage will continue. 5.4 Fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the show cause notice, it is quite evident that duty has been not demanded by enhancing the assessable value of the processed fabric, but is demanded on the value of grey fabric by increasing the quantity of grey fabric. This is explained by taking the first row in the Annexure B Calculation of Duty as per Show Cause Notice: Lot No a 002216 Grey Received (Mtrs) b 3011.00 4.2% of Grey Received added in Grey Received c=b+.042Xb 3137.46 Processed Goods Delivered (Mtrs) d 2646.50 Diff quantity e= c-d 490.96 Grey Rate f 21.63 Differential Value g=eXf 10717.70 Differential Duty h=0.1Xg 1071.77 5.8 As per the trade notice 65/2002 the duty payable should have been determined in the following manner, taking processing charges as B an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the assessable value by multiplying the price of processed grey fabrics per metre by the total quantity moving out of the factory after the process. Therefore, I agree with the view taken by the Member (Technical) that what is relevant for the purpose of duty is the intrinsic value of grey cloth plus the value of job work and manufacturing profits, expenses etc. The assessee will be entitled to abatement on the profit element, if any, of the raw material supplier included in the assessable value 9. The appellants relied upon the decision of Gemini Dyeing Printing Mills Ltd. v. CCE, Bangalore, reported in 1997 (91) E.L.T. 195 (Tribunal). In this case the decision of the Hon'ble Supreme Court in the case Ujagar Prints v. Union of India and Ors. is not taken into consideration. In these circumstances as the issue is already settled by the decision of the Hon'ble Supreme Court, therefore, view taken by the Tribunal in the case of Indian Rayon and Industries Ltd. v. CCE, Calcutta-IV (Supra) is approved and the decision taken by the Tribunal in the case of Gemini Dyeing Printing Mills Ltd. v. CCE, Bangalore (Supra) is over-ruled. 5.10 In our view Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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