2000 (7) TMI 422 - AT - Central Excise

Appeal allowed on grounds of natural justice violation, remanded for fair assessment.

The appeal was allowed due to the violation of natural justice in the proceedings. The matter was remanded for a fair determination of the assessable ... Show cause notice - Natural justice - Valuation Issues:1. Interpretation of Supreme Court's order on assessable value of processed fabrics.2. Allegation of not adding manufacturing expenses and profit to assessable value.3. Necessity of adding a separate margin of profit in job work charges.4. Commissioner's determination of manufacturing profit.5. Violation of natural justice in the proceedings.Issue 1 - Interpretation of Supreme Court's order:The judgment involved an application where the main appeal was taken up for disposal by granting a waiver of the duty confirmed amount. The Supreme Court's order in the case of Ujagar Prints was cited, declaring the assessable value of processed fabrics. The Assistant Collector interpreted this order to include manufacturing expenses and manufacturing profit as distinct elements in the assessable value, leading to the confirmation of demands.Issue 2 - Allegation of not adding manufacturing expenses and profit:Three show cause notices were issued to the appellants for not adding manufacturing expenses and profit to the assessable value of processed fabrics. The Assistant Collector confirmed the demands based on the interpretation of the Supreme Court's order, even though the assessees claimed that manufacturing expenses and profits were included in the job charges.Issue 3 - Necessity of adding a separate margin of profit:Several Tribunal judgments discussed the necessity of adding a separate margin of profit in job work charges. It was concluded that the job charges already included manufacturing costs and job workers' profit, making a separate levy of duty for manufacturing profits unwarranted.Issue 4 - Commissioner's determination of manufacturing profit:The Commissioner (Appeals) questioned the quantum of profit as 'reasonable' and remanded the proceedings for the determination of manufacturing profit. The Assistant Collector determined the profit margin year-wise and confirmed the demands, despite variations in the percentage of profit.Issue 5 - Violation of natural justice:The Tribunal found that the proceedings violated the basic principles of natural justice as the assessees were not informed of the exact charges against them. The matter was remanded to the Assistant Collector for a clear determination of lacking elements in the computation of assessable value, giving the assessees an opportunity to state their case.In conclusion, the appeal was allowed due to the violation of natural justice, and the matter was remanded for a fair determination of the assessable value of processed fabrics, considering all relevant elements and giving the assessees a chance to defend their case.