Custom, Excise & Service Tax Tribunal
Commr. Of Central Excise, Kolkata-Iv vs M/S. Aditya Birla Nuvo Ltd on 9 July, 2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Excise Appeal Nos.533/2007 & 595/2007
(Arising out of the Order-in-Original No. 116/Commr./CE/Kol-IV/2007 dated 30/05/2007 passed by the Commissioner, Central Excise & Service Tax, Kolkata-IV)
For approval and signature of:
DR.D.M. MISRA, HONBLE JUDICIAL MEMBER
DR. I.P. LAL, HONBLE TECHNICAL MEMBER
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1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
Commr. of Central Excise, Kolkata-IV
APPELLANT(S)
VERSUS
M/s. Aditya Birla Nuvo Ltd.
RESPONDENT(S)
APPEARANCE
Sri A.K. Biswas, Supdt. (A.R.)
FOR APPELLANT(S)
Sri J.P. Khaitan, Sr. Advocate &
Shri Agnibesh Sengupta, Advocate
FOR THE RESPONDENT(S)
CORAM:
DR.D.M. MISRA, HONBLE JUDICIAL MEMBER
DR. I.P. LAL, HONBLE TECHNICAL MEMBER
DATE OF HEARING & DECISION : 09/04/2014
ORDER NO. FO/A/75453-75454/14
Per DR.D.M. MISRA
This appeal is filed by the Revenue against Order-in-Original No. 116/Commr./CE/Kol-IV/2007 dated-30/05/2007.
2. Briefly stated the facts of the case are that the respondent was issued with a show cause-cum-demand notice on 15/6/1996 alleging that the determination of value of the processed fabrics was incorrect for the period from June 1991 to December, 1995, in as much as the quantity of grey fabrics after being processed, resulted into shrinkage, ranging from 4 to 5% loss. However, while clearing the processed fabrics, the applicant had taken the cost of grey fabrics per square meter at the time of its clearance but not the cost of grey fabrics that were received. For example, if 100 square meter of grey fabrics were received, due to shrinkage, it became 95% after processing and while calculating the value, the respondent had considered the cost of grey fabrics equivalent to 95 meters. Demand was confirmed by the Commr. of Central Excise. Aggrieved, the appellant filed an appeal before this Tribunal. There was difference of opinion on the subject between the Members. Accordingly, the matter was referred to the third member. The final order was ultimately passed, per majority, on 3rd May, 2002. According to the said order, the matter was remanded to the original authority to work out the exact amount of differential duty liability on the appellant and the amount of penalty imposed on that. Consequently, the Ld. Commissioner has re-adjudicated the case and determined the liability and penalty. Aggrieved by the said order, the Revenue is in appeal.
3. Arguing the case on behalf of the Revenue, the Ld. A.R. Shri A.K. Biswas submitted that the adjudicating authority in the de novo adjudication has erred in not carrying out the direction of this Tribunals remand order dated 3/5/2002, wherein, it has been opined that the value for the purpose of duty, is the intrinsic value of grey cloth, plus the value of job work and manufacturing profit, expenses etc. It is their contention that the respondent would be entitled to abatement on the profit element, if any, of the Raw material supplier included in the assessable value, as the same would be post manufacturing profit. It is the grievance of the Revenue that the processing charges realized by the assesse were inclusive of the value of job work plus the manufacturing profit and manufacturing expenses. Therefore, the assessable value of the processed fabrics ought to be the intrinsic value of grey fabrics plus processing charges realized. Further, adjudication of any amount might not be relevant in the present case. Thus the abatement on account of traders profit included in the case of grey fabrics amounting to Rs.27,81,235/- and Rs.19,31,661/- for the period from June, 1991 to February, 1994 and March 1994 to December, 1995 is not in conformity with the order of this Tribunal dated-3/5/2002. Further, the Revenue contended that the adjudicating authority has failed to consider the specific duty applicable at the rate of Rs.0.50 per square meter during the period from June, 1991 to February, 1994 and no discussion was recorded in the impugned order.
4. Ld. Sr. Advocate for the respondent argued that the Adjudicating authority has correctly followed the observation of the CESTAT in its final order dated-3rd May, 2002. The Ld. Commissioner while considering the facts observed and took into consideration the brake up of the value declared by raw material suppliers viz. S.K. Fabrics, M/s. Modi Textiles, M/s. Gomati Textiles for the relevant period, the Ld. Commissioner has recorded the following elements of cost:
i) Cost of grey fabrics per meter inclusive of transport charges
ii) Processing Charges
iii) Bailing/Packaging Charges
iv) Decasting Charges and
v) Profit After recording the said elements, the Ld. Adjudicating Authority has come to the conclusion that the profit element of the Raw material Supplier/Trader ought to be deducted in view of the direction of this Tribunal. Consequently, the assessable value had been determined after deducting the traders profit. Further, he submits that the present issue relates to determination of assessable value of the processed fabrics and has no relation with the specific rate of duty that is levied at the relevant time @ 50 paisa per meter, which has been rightly observed by the Ld. Adjudicating authority being not leviable on shrinkage quantity of the fabrics.
5. Heard both sides and perused the records. We find that this Tribunal has remanded the case to the adjudicating authority for re-determination of the assessable value and in the observation of the third member, on reference at para 22 as under:
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 assesse will be entitled to abatement on the profit element, if any, of the raw material supplier included in the assessable value.
6. It is clear from the said observation that for the purpose of determination of duty, it is the intrinsic value of the grey cloth and the value of job work and manufacturing profit, expenses etc. would be relevant. It is also made clear that the assesse would be entitled to abatement on the profit element,if any, of the raw material supplier/Trader if included in the assessable value. On perusal of the declaration filed by the Traders/Raw material suppliers, we find that while calculating the assessable value, profit earned by the traders had also been included. We do not agree with the contention of the Revenue that since profit which had been included in processing charges, therefore, cannot be deducted. This contention has no merit, as processing charges collected by the Appellant and profit were shown separately, in the respective declaration filed by the Respondent. In the result, the contention of the Revenue cannot be upheld. Further, we find that during the relevant period i.e. from June, 1991 to February, 1994, the rate of duty levied was specific-cum- ad valorem rate of duty. By virtue of relevant Notification, the duty required to be paid was the specific rate @ 0.50 paisa per square meter plus 5% ad valorem. We find that the dispute relates to determination of value on account of shrinkage in the supplied grey fabrics and nothing to do with the specific rate of duty charged per square meter on the processed fabrics at the time of its clearance from the factory. Therefore, the quantity of grey fabrics received and later on processing shrunk, has no bearing with the specific rate of duty applied at the time of clearance of processed fabrics. In the result, we do not find any merit in the appeal filed by the Revenue and the same is dismissed.
(Operating part of the order already pronounced in the Court)
Sd/- 11/08/2014 Sd/- 08/08/2014
(DR.I.P.LAL) (DR. D.M. MISRA)
TECHNICAL MEMBER JUDICIAL MEMBER
k.b/-
Excise Appeal No.533/2007
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