2004 (10) TMI 483 - AT - Central Excise

Valuation - Textile materials processed - Demand - Res judicata - Reference to Larger Bench

Summary

Issues Involved:
1. Basis for assessment of textile materials (pre-shrunk or shrunk material).
2. Applicability of the principles of res judicata in taxation matters.
3. Appropriate order/relief to be passed in the appeals.

Issue-Wise Detailed Analysis:

1. Basis for Assessment of Textile Materials:
The primary issue in these appeals is the determination of the assessable value of processed fabrics. The department contends that the value of pre-shrunk material should be considered for assessment, whereas the assessee argues that the value of the shrunk material should be used, referencing the Tribunal's judgment in the case of Gemini Dyeing & Printing Mills Ltd. v. CCE, Bangalore, which states that the value of the shrunk material alone is required for assessment. The Tribunal's findings in Gemini Dyeing & Printing Mills Ltd. emphasized that the cost of the grey cloth fabric should be added by the appellant, but the duty should be calculated based on the shrunk material post-processing. However, a conflicting view was presented by the Kolkata Bench in the case of Indian Rayon & Industries Ltd. v. CCE, which supported the inclusion of the value of grey cloth plus job work, manufacturing profits, and expenses in the assessable value, as per the Supreme Court's decisions in Ujagar Prints. The Tribunal noted the direct conflict between these judgments and referred the matter to a Larger Bench for resolution.

2. Applicability of the Principles of Res Judicata in Taxation Matters:
The appellants raised the issue that the demands are barred by the principles of res judicata, as previous demands were decided in their favor, and nine show cause notices were withdrawn. The appellants cited various judgments to support their claim. Conversely, the Revenue argued that the principles of res judicata do not apply in taxation matters, citing contra judgments. Due to these conflicting views, this issue was also referred to the Larger Bench for a definitive ruling.

3. Appropriate Order/Relief to be Passed in the Appeals:
Given the unresolved conflicts in the judgments and the principles of res judicata, the Tribunal concluded that the matter should be referred to a Larger Bench. The Larger Bench is to be constituted by the Hon'ble President to decide on the three issues: the basis for assessment (pre-shrunk or shrunk material), the applicability of res judicata in taxation matters, and the appropriate order/relief to be passed in these appeals.

Conclusion:
The Tribunal, recognizing the conflicting judgments and the complex legal questions involved, decided to refer the matter to a Larger Bench. The Hon'ble President is to constitute this Larger Bench to address and resolve the issues comprehensively. The Registry is directed to transmit the records to the Hon'ble President for further action.