Assessable value at processor's gate defeated differential excise duty demand where prior assessment already exceeded the correct valuation basis.

Assessable value under Section 4 had to be fixed at the processor's deemed factory gate, and the Tribunal applied Ujagar Prints to hold that trader's profit was not to be added at that stage. Because the goods had already been assessed on a value higher than the processor's own gate value, the alleged under-declaration of job charges did not establish any short levy. The assessee was entitled to contest the quantum of differential duty by showing that the correct assessable value and rate did not support the demand, and the Revenue's request for remand was rejected. The differential duty demand, penalty, and confiscation were not sustainable.

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Issues: Whether differential excise duty and consequential penalty were sustainable where the processors had under-declared part of the job charges, but the goods had already been assessed on the higher trader or merchant-manufacturer price rather than on the deemed factory gate value of the processors.

Analysis: The assessable value under Section 4 of the Central Excises and Salt Act, 1944 had to be determined on the basis relevant to the processor's deemed factory gate. The prior declaration and assessment at the merchant manufacturer's gate were found to be at a higher value than the processor's deemed gate value. The principle relied on from Ujagar Prints showed that trader's profit was not to be added at the processor's gate, and the earlier assessment already exceeded the value that would otherwise have been adopted. The Tribunal also applied the principle that, when differential duty is demanded, the assessee may contest the quantum of duty by showing that the correct assessable value and rate of duty do not support the demand. On the facts, there was no short levy, and the Revenue's plea for remand to verify the existence of the same position in every case was rejected.

Conclusion: The demand for differential duty was not sustainable and the penalty and confiscation order could not stand.

Ratio Decidendi: Where duty has been assessed on a value higher than the processor's deemed factory gate value, an alleged under-declaration of job charges does not by itself establish short levy or justify a differential duty demand.

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