Ujagar
Prints Vs. Union of India & Ors [1989] INSC 29 (27 January 1989)
Pathak,
R.S. (Cj) Pathak, R.S. (Cj) Rangnathan, S. Mukharji, Sabyasachi (J) Natrajan,
S. (J) Venkatachalliah, M.N. (J)
CITATION:
1989 AIR 972 1989 SCR (1) 344 1989 SCC (3) 531 JT 1989 (1) 157 1989 SCALE
(1)195
ACT:
Central
Excises and Salt Act, 1944/Central Excise Rules, 1944: Sections 2(f), 4/Rule
179 Processed fabric--Assess- able value-Determination of--Judgment of the
Court dated November 4,
1988--Clarified.
HEAD NOTE:
On a
civil miscellaneous petition for clarification of this Court's judgment dated 4th November, 1988, the Court.
HELD:
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. [345D-E]
The
factory gate means the "deemed" factory gate as if the processed
fabric was sold by the processor. [345E]
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. Such a declaration would include only the price or deemed price at which
the processed fabric would leave the processor's factory plus his profit. It is
necessary to include the processor's expenses, costs and charges plus profit,
but not the trader's profits who gets the fabrics processed, because those
would be post-manufacturing profits. [345G-H; 346B-C]
ORIGINAL
JURISDICTION: Civil Miscellaneous Petition No. 32937 of 1988.
345 IN
Writ Petition No. 12 183 of 1985.
(Under
Article 32 of the Constitution of India).
K.K. Venugopal,
Mrs. Jayashree Wad and Mrs. Aruna Mathur for the Petitioners.
K. Parasaran,
Attorney General, A.K. Ganguli, P. Parmes- waran and K. Swamy for the
Respondents.
The
following Order of the Court was delivered:
ORDER
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 whatev- er 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
Rs.20 and the value of the job-work done is Rs.5 and the manufacturing profit
and expenses for the processing be Rs.5, then in such a case the value would be
Rs.30, being the value of the grey-cloth plus the value of the job-work done
plus manufac- turing profit and expenses. That would be the correct as- sessable-value.
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 that the declaration as to the price at which he would be
selling the processed goods in the market, would include only the price or
deemed price at which the processed fabric would leave the processor's factory
plus his profit. Rule 174 of the Central Excise Rules, 1944 346 enjoins that
when goods owned by one person are manufactured by another the information is
required relating to the price at which the said manufacturer is selling the
said goods and the person so authorised agrees to discharge all the liabil- ities
under the said Act and the rules made there under. The price at which he is selling
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 charges 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.
N.P.V.
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