2005 (7) TMI 486 - AT - Central Excise

Summary

Issues:
Common issue involving determination of manufacturing expenses and manufacturing profits to be included in the assessable value of fabrics processed on job work basis.

Analysis:
The appeals in this case revolve around a common impugned order confirming a total duty demand. The issue at hand is the inclusion of manufacturing expenses and manufacturing profits in the assessable value of fabrics processed on a job work basis. The assessable value comprises the value of grey cloth, value of job work done, manufacturing expenses, and manufacturing profit. The appellants did not dispute the inclusion of manufacturing expenses and profits but contested the addition of 5 to 12% towards shrinkage, insurance, and other expenses, claiming it included manufacturing profits and expenses in job charges. However, it was clarified that manufacturing profits were not included in job work charges. The Commissioner (Appeals) correctly upheld the addition of 12% to the assessable value, emphasizing that all expenses related to the fabrics until they leave the processor's factory gate must be included.

The appellants' argument that manufacturing expenses and profits were included in job charges was deemed a misconception of the law. The job charges only represent the value of the job work done, distinct from manufacturing expenses and profits. The selling expenses and profit of the trader should not be included in assessable values. The impugned order proposed an addition of 12% for manufacturing expenses and profits, which was supported by positive material and specified elements. The Asstt. Commissioner had the authority to determine the various elements contributing to the assessable value under the Central Excise Valuation Rules, 1975.

The contention that the inclusion for determining the assessable value was contrary to law was dismissed. The authorities correctly determined the assessable value and raised the demand accordingly. The Tribunal upheld the impugned order and rejected the appeals, emphasizing the validity of including manufacturing expenses and profits in the assessable value of fabrics processed on a job work basis.