2005 (10) TMI 316 - AT - Central Excise

Summary

Issues: Valuation of cut-pieces of fabrics

Analysis:
The appellant, a manufacturer of man-made cotton fabrics, processes grey fabrics on a job work basis. The dispute revolves around the valuation of cut-pieces of fabrics. The appellant values the cut-pieces at 25% of the value of first quality fabrics. However, the Commissioner (Appeals) held that the value of cut-pieces should be the same as that of the first quality fabrics, leading to this appeal.

The appellant argued that the value of cut-pieces should be determined under the best judgment method as per Rule 7 of the Central Excise Valuation Rules. They contended that the Assistant Commissioner had accepted the value declared by them after examining the fabrics in question, which were deemed defective. The appellant maintained that cut-pieces should not be valued the same way as first quality fabrics due to their differing nature.

On the other hand, the SDR argued that the value of processed fabrics should be determined based on the formula established in the Ujagar Prints case. They emphasized that the appellant's attempt to value the cut-pieces differently lacked support from any Tribunal or Court decision.

The Tribunal noted that the appellant sought to value cut-pieces differently from first quality fabrics, despite both products undergoing similar manufacturing processes. The Tribunal rejected the appellant's argument that the value of cut-pieces should be based on market prices, as this approach was deemed inappropriate for goods manufactured by a job worker. The Commissioner's decision to value cut-pieces at the same rate as first quality fabrics was upheld, emphasizing that the formula laid down by the Supreme Court should be followed for goods produced by a job worker. The Tribunal found no evidence to suggest that the cost elements for cut-pieces were different from those for first quality fabrics, leading to the rejection of the appeal.