TMI Blog2000 (4) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... am Synthetics Ltd., Prafful Overseas Pvt. Ltd. and Prafful Exports. According to the Department, the assessee Prafful Industries Ltd. and three suppliers of grey fabrics, namely, Ganga Ram Synthetics Ltd., Prafful Overseas Pvt. Ltd. and Prafful Exports are managed by the members of the same family, have common office at Surat and are having financial transactions between them making all of them related persons. Assessee had been paying duty on the processed fabrics which were cleared in Lump/Taka form on payment of duty on the basis of manufacturing cost plus manufacturing profit and the cost of grey fabrics as held by the Hon'ble Supreme Court in Ujagar Prints case. Surat Commissionerate issued circular, dated 30-5-1994 by which job worker was to pay duty on the landed cost of raw material plus job charges and their profit. It was stated therein that the selling price of the trader was not to form part of the assessable value. Prafful was paying excise duty strictly in terms of this trade notice. On the allegation that there is mutual interest between the assessee, Prafful Industries Ltd. and the trader Ganga Ram Synthetics Ltd., show cause notice was issued demanding a sum of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain Aggarwal and Shri Shiv Narain Aggarwal was also imposed under Rule 209A of the Central Excise Rules. A penalty of Rs. 20 Lacs was imposed on Ganga Ram Synthetics Ltd. under Rule 209A. These actions are under challenge. 5. On the facts of this case, it is highly necessary to properly understand the scope and ambit of the clarificatory order passed by Their Lordships of the Supreme Court in Ujagar Prints v. Union of India reported in 1989 (39) E.L.T. 493 (S.C.). We consider it advantageous to read that order in its entirety. "In respect of the civil miscellaneous petition for clarification of this Court's judgment dated 4th November, 1988, it is made clear that the assessable value of the processed fabric would be the value of the grey-cloth in the hands of the processor plus the value of the job work done plus manufacturing profit and manufacturing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on to state that the trader who gives the grey fabric for job work should give a declaration as to what would be the price at which he would be selling the processed goods. On the basis of that declaration excise authorities are to fix the assessable value of the processed fabric and duty should be levied from the job worker. The declaration as to the price given by the trader should include only the price at which the processed fabric would leave the job workers premises together with the job workers profit. This declaration to be filed by the trader; according to Their Lordships, is the one which will conform to the provisions contained in Rule 174 of the Central Excise Rules. Their Lordships further made it clear that the price at which the job worker is selling the goods must be the value of the grey-cloth plus value of the job work done together with the manufacturing profit and manufacturing expenses. No other amount spent on the fabric towards expenses by trader or subsequent profit earned by the trader can be the value of the goods for the purpose of assessment. It was also clarified that the expenditure incurred by the trader subsequent to the movement of the goods from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and that Ganga Ram Synthetics are not the traders. 8. Since Prafful Industries are only job workers, they are not to be treated as owner of the goods selling them to or through related persons, namely, Ganga Ram Synthetics. Only in a case where the assessee who is the owner of the goods manufactured by him sells in the course of wholesale trade to or through a related person, the price at which the goods are sold by the related person in the course of wholesale trade can become the basis for assessment to excise duty. In the case of job worker, by fiction he is made the manufacturer and removal of goods by him back to the trader as sale and duty payable reckoning the value of goods as well. Such a deemed sale by the job worker to the trader under no circumstance can come under Section 4(l)(a)(iii) of the Central Excise Act. 9. Prafful Industries, the assessee before us, carries out job work for independent traders as well. They have got 200 other traders who get their grey fabrics processed by the assessee. Records available in this case show that the assessee realised same charges from other independent traders for the work carried out on the same type of cloth supplied by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s. S. Kumars Ltd. Ors. v. Collector of Central Excise, Indore, where the facts are virtually identical, a Bench of two Members (President and Shri C.N.B. Nair, Member Technical) took the view that the decision in Ujagar Prints has no impact on excise duty payable by job worker even where trader is related in a situation where the charges realised by the job worker is not depressed or suppressed on account of relationship. That view is unassailable. Prafful Industries, job worker in this case is not a dummy of the trader. It has its own establishment and machinery. As per the records the cost of machinery owned by the assessee is worth nearly Rs. 3.5 Crores. The relationship has, in no manner, depressed the manufacturing charges. 13. Department has no case that Ganga Ram Synthetics, the trader, did not furnish all the details required by Rule 173 of the Central Excise Rules, 1944 which is made mention of by Their Lordships in the second paragraph of the judgment in Ujagar Prints case. On the facts and on the basis of records now available in the case, we have no hesitation in holding that the job work undertaken by the assessee on the fabrics supplied by Ganga Ram Syntheti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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