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TMI Blog2001 (10) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounted for in the statutory record and subsequently removed without payment of duty should not be demanded from them under Rule 9(2) read with proviso to Section 11A of the CEA, 1944; (iii) An amount of Rs. 3,72,209 being the duty not paid on the total quantity of blades 31,43,745 Nos. valued at Rs. 24,81,390/- which were used for testing purposes during the period from 1997-98 to 1999-2000 should not be demanded from them under Rule 9(2) read with proviso to Sec. 11A of the CEA, 1944; (iv) Duty amounting to Rs. 3,141/- on quantities reported to have been stolen during the years 1998 and 1999 should not be demanded under Rule 9(2) read with proviso to Sec. 11 A(1) of the CEA, 1944; (v) The credit of Rs. 1,71,083/- irregularly availed on fake invoice No. 942, dated 16-10-97 of M/s. Twenty First Century Printers Ltd. Silvasa and reversed under protest under Rule 233B of the CE Rules. 1944 vide entry No. 254, dated 11-6-99 should not be confirmed under Rule 57(1) of C.E. Rules, 1944; (vi) A penalty equal to the duty demanded at Sl. No. (i), (ii), (iii) and (iv) should not be imposed under Sec. 11A of the CEA, 1944; (vii) A penalty equivalent to the irre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove in terms of Sec. 11AB of the Central Excise Act, 1944; and (viii) Penalty should not be imposed under Rule 9(2), 52A(8), 173Q of the Central Excise Rules, 1944 for contravention of Rules 9(1), 52A, 57G, 173B, 173C, 173F, 173G of the Central Excise Rules, 1944. 3. The appellants have filed the stay application challenging both the orders. They seek for waiver of pre-deposit and for remand of the matter on the following grounds : (a) Both the appellants are job workers for manufacture of blades for Vidyut Metallic Ltd., Bombay. Appellants had filed their classification list, price list and other declarations declaring the selling price of the blades which they had taken up for manufacture on behalf of Vidyut Metallics Ltd., under Notification No. 27/92, dated 14-5-92. In terms of the said notification the valuation under Section 4 is required to be taken in terms of the selling price of the manufacturer that is Vidyut Metallics Ltd. The appellants had clearly declared the selling price of the blades of Vidyut Metallics Ltd. and were discharging duty. However, the Department after due investigation issued show cause notice to both the job workers who are appellants her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the said Act and the rules made thereunder. The price at which he is selling the goods must be the value of the grey-cloth or fabric plus the value of the job work done plus the manufacturing profit and the manufacturing expenses but not any other subsequent profit or expenses. It is necessary to include 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. 4. They contend that in terms of the above ruling the price of the manufacture is required to be taken from that of the manufacturer and not that of the job worker. They contend that the department got the whole issue verified through a Cost Accountant in respect of both the appellants. The report was submitted and a copy was furnished to appellants. The appellants challenged the correctness of the report on the ground that : (a) That ground loss had not been taken into account. (b) Damage of burn blades not taken into account. (c) Thickness of blade for computing the weight had not been correctly taken. 5. It is contended that the department referred the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside. 9. They further contend that in respect of RCC Sales Pvt. Ltd. an amount of Rs. 50,30,212/- has been confirmed being the duty not paid on blades produced and said to be clandestinely removed by them on allegation of under-valuation. It is contended that this amount is not liable to be confirmed as the department had referred their objection on the first report of the Cost Accountant for re-valuation. The report was awaited and in the absence of the second report the proceedings should not have been concluded and demands confirmed on this ground. Therefore, the matter requires to be remanded back to take into consideration the second report of the Cost Accountant which is awaited in the matter. 10. Ld. Counsel Shri N. Venkatachalam, Advocate along with Shri Muthu Venkatachalam, Advocate and Shri A. Vijayaraghavan, Consultant pleaded that the case requires to be remanded for the ground already referred to above. He further submits that the Commissioner has mis-applied the contents of the notification. He submits that the notification which has been referred to by the Tribunal in the case of Sangam Processors (Bhilwara) Ltd. v. CCE as reported in 2000 (122) E.L.T. 45 and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units viz VML, RCC and Microraj under agreement, are more or less in the nature of transfer pricing and hence scope of suppressing value in order to share financial accommodation among the three units and ultimately suppressing the value of final products cannot be ruled out and hence I am lead to an irresistible conclusion that there is short payment on account of under-valuation. Further, I must also say that the present case is similar to Ujagar Prtints case. The Constitution Bench in a two paragraphs order dt. 27-1-89 reported in 1989 (39) E.L.T. 493 clarified that the assessable value of the processed fabric would be value of gray-cloth (raw material) in the hands of processor (job worker) plus the value of job work done plus manufacturing profit and manufacturing expenses whatever they pay. Thus, I have no doubt in my mind to say that the valuation done by the department with the help of Cost Accountant in this case is in accordance with ratio laid down by the Hon ble Supreme Court in the above case. Further, I must also observe that the demand in question is also covered by the provisions of Section 110 of the Finance Act, 2000; this section clearly provides that the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the main point required for confirmation of the duty is : (a) to arrive at the correct valuation, (b) to come to a conclusion as to whether there was any clandestine removal or not. 16. Both the show cause notices has adopted to costing on the basis of the Cost Accountant s report. This was challenged and the grounds were raised by the appellant. The Cost Accountant took up the matter for reconsideration and submitted his report in the case of Micro Raj Electronics. 17. This vital basis of observation was required to have been taken into consideration by the ld. Commissioner. On a perusal of the finding portion of the Commissioner s order, we notice that he has not referred to second report of the Cost Accountant, thereby the pleas of the ld. Counsel that the order is not speaking order and that had this report had it been taken into consideration the demand would not have been confirmed is well taken. We are of the considered opinion after perusing of the judgment of the Apex Court in the case of Ujagar Prints (supra) and the observation made in the case of Sangam Processors (Bhilwara) Ltd. (supra), that the ld. Commissioner has erred in not properly applyi ..... 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