TaxTMI 
TaxTMI 
2000 (7) TMI 78
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.... 2.It is not in dispute that the appellant was incorporated on 30-12-1982 and after making arrangements for obtaining finance it started a Unit from 3-1-1985 wherein it commenced commercial production of its own brand of biscuits. 3.On 15-12-1986, an agreement was entered into between the appellant and Britannia which required the appellant to manufacture biscuits for Britannia. The terms of the agreement, broadly speaking, envisaged that the ingredients for the manufacture of biscuits as well as the recipe or method by which the biscuits were to be manufactured were to be supplied by Britannia. The ingredients so supplied were also to be regarded as belonging to Britannia for the manufacture of the biscuits. The appellant was required....
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....nt Collector by his order dated 29-6-1988 came to the conclusion that the biscuits manufactured by the appellant were to be cleared and excise to be paid on the value of the said biscuits calculated after taking into consideration Britannia's wholesale price. 8.The appellant filled an appeal before the Collector (Appeals) and the Collector (Appeals) passed an order rejecting the said appeal and affirmed the order of the Assistant Collector dated 29-6-1988. In fact the Tribunal held that the appellant was an agent of Britannia and therefore it is the Britannia's wholesale price which is to be taken into consideration for arriving at the normal value for the purposes of computing the excise duty of the biscuits manufactured by the ....
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....iable to pay excise duty not because they were the owners of the goods but because they caused the manufacture of the goods. 11.It was held that it could not be contended, keeping in view the provisions of Section 4 and the Central Excise (Valuation) Rules, 1975 that the assessable value of the processed fabric should comprise only of the processing charges disregarding the value of the grey cloth. 12.Justice Mukharji, in a separate but concurring judgment observed that the assessable value of the goods manufactured would include the value of the grey cloth in the hands of the processor plus the value of the job work done plus manufacturing profits and manufacturing expenses. The correct assessable value was to be the value of the fab....
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....clude 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". 16.The present case is similar to Ujagar Print's case. In Ujagar Prints' case, it was the grey cloth which was given to the processor whereas in the present case it was the raw material for the manufacture of biscuits given to the appellant. After the biscuits are made, they are given back to or are delivered under the instructions of Britannia. The appellant was entitled to receive processing charges which include its expenses plus profits for the purpose of determining the excise value. However, the cost of the raw mater....