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TMI Blog1986 (12) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excises and Salt Act as it stood prior to its amendment by the Central Excise and Salt and Additional Duty of Excise (Amendment) Act, 1980 so as to attract levy of excise duty on the processed fabrics and whether, in any event, after the Amendment Act, these processes amount to manufacture and excise duty is leviable on the processed fabrics. The other question is whether, even if the processed fabrics are assessable to excise duty in the hands of the processor who carries on these processes' on job work basis, what is the value on the basis of which the processed fabrics are liable to be assessed. So far as the first question is concerned, it was agitated before this Court in Empire Industries Ltd. v. U.O.I. - (1985) 3 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value would naturally include the value of grey fabrics supplied to the independent processors to be utilised for the payment on the processed fabrics in accordance with the Rules 56-A or 96-D of the Central Excise Rules, as the case may be." 2. The learned Counsel for the petitioners and the appellants contended that these observations did not represent the correct law on the subject and that this question was required to be reconsidered in some depth because it vitally affected the processors who were carrying on processing of cotton and man-made fabrics on job work basis. 3. It was common ground between the parties that the procedure followed by the Excise authorities was that the trader, who entrusted cotton or man-made fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned to the trader, levy of excise duty could only be on the value of the job work done and no other elements could be loaded into this value. It was also contended in the alternative by the learned Counsel that in any event the assessable value of the processed fabric could not possibly include the profit at which the trader sold the processed fabric since the processor was concerned only with the processing of the grey fabric and was not concerned with the sale which the trader might effect after the processing was done and the manufacture of processed fabric was completed. We do not agree with the first contention of the learned Counsel on behalf of the petitioners and the appellants but the alternative contention urged by him is certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the grey cloth is one of the raw materials which goes into the manufacture of the processed fabric and the value of the processed fabric cannot be computed without including the value of the raw material that goes into its manufacture. The assessable value of the processed fabric cannot therefore be limited merely to the value of the job work done but it must be determined by reference to the wholesale cash price of the processed fabric at the gate of the factory of the processor. Thus in the example given above the assessable value of the processed fabric must be taken to Rs. 20 + 5 that is Rs. 25/-and the profit of Rs. 5/- which the trader may make by selling the processed fabric cannot be included in the assessable value. The element ..... X X X X Extracts X X X X X X X X Extracts X X X X
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