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TMI Blog2019 (2) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... able value of the processed fabric, but is demanded on the value of grey fabric by increasing the quantity of grey fabric. There is no dispute about the fact that duty has been paid by the appellants after determining the assessable value as per trade notice of 31.03.2003. When the total quantum of the grey fabric received has been taken into account while determining the landed cost of grey fabric then the shrinkage factor is part of the total value, and there cannot be further addition to the same. The Adjudicating authority have fallen in error to the extent of addition of the “shrinkage factor” over and above the landed cost of grey fabric as received by the appellants - demand set aside - appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,04,749/- debited by M/s. Universal Knitting Mills Pvt. Ltd. against the said demand on 06.12.2007 is ordered to be appropriated against the same. M/s. Unibersal Knitting Mills Pvt. Ltd. are directed to pay the differential amount of ₹ 41,711/- forthwith. (6) Out of the demand of ₹ 2,98,611/- raised vide No.V.Adj/Vikh.Dn./R-02/UKM/CR-19/04 dated 07.03.2005 (for February to March, 2004) the amount of ₹ 1,42,470/- is confirmed on the basis of the working as discussed hereinabove and the amount of ₹ 1,16,222/- debited by M/s. Universal Knitting Mills Pvt. Ltd. against the said demand on 06.12.2007 is ordered to be appropriated against the same. M/s. Unibersal Knitting Mills Pvt. Ltd. are directed to pay the differential amount of ₹ 26,248/- forthwith. (7) Out of the demand of ₹ 2,45,615/- raised vide No.V.Adj/Vikh.Dn./R-02/UKM/CR-2/04 dated 04.05.2005 (for April to 07.07.2004) the amount of ₹ 1,38,639/- is confirmed on the basis of the working as discussed hereinabove and the amount of ₹ 1,22,714/- debited by M/s. Universal Knitting Mills Pvt. Ltd. against the said demand on 06.12.2007 is ordered to be appropriated again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. 3.1 In their appeal appellants have assailed the order of Commissioner (Appeal) statingi. During the period of dispute i.e. from the 31.03.2003, the valuation of processed fabric was to be done as per Trade Notice No 14/CEX/Textile/(1)/03 dated 31.03.2003 (CBEC Circular No 703/19/2003-CX). As per the said trade notice "the duty would be worked out on the value calculated on the basis of the price of inputs i.e. yarn or grey fabrics plus the actual job charges." ii. Appellants submitted the value for determination of the duty was calculated by them following the said trade notice. However lower authorities while adjudicating the case have relied upon the earlier trade Notice issued prior to 31.03.2003, for demanding and confirming the demand of duty against them. iii. It is settled law that that the circular/ instructions issued by the CBEC are binding on the departmental authorities. They rely upon various authorities listed below in support of the said preposition - a. Paper Products Ltd [1999 (112) ELT 765 (SC)] b. Ranadey Micronutrients [1996 (87) ELT 19 (SC)] c. Dhiren Chemical Industries {2002 (139) ELT 3 (SC)] d. IOC Ltd [2004 (165) ELT 257 (SC)] e. Tega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Prints [1999 (95) ELT 864 (T)] has held that Shrinkage Value needs to be added to determine the assessable value. This decision of the Tribunal has been upheld by the Apex Court as reported at [199 (111) ELT A63 (SC)]. He also submitted the trade notice No 46/2002 dated 18.11.2007 issued by the Mumbai II, "The shrinkage of man made fabrics would be taken as the same as was being done earlier i.e. @ 4%. Therefore the shrinkage factor would be 1.042, where the actual shrinkage is significantly higher than the average 4%, the general practice was that the cost was worked out on the basis of actual shrinkage. This practice will continue." Since this trade notice was not withdrawn/ abrogated by the subsequent trade notice Commissioner (Appeal) was right in relying upon the same for upholding the demand 5.1 We have considered the submissions made in appeal and during the course of argument. 5.2 Commissioner (Appeal) has vide his order in appeal No SRK/378/M-II/2007 dated 5.10.2007, remanded the matter back to adjudicating authority with following observations- "I have gone through the case records and appellant's submission. There is no dispute as regards addition of job charges an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bringing the raw material to the premises of the job workers. The prevailing practice as referred in the above trade notice was described in the Trade Notice No 65/2002 dated 30.09.2002 issued by the Commissioner of Central Excise Mumbai-IV when the average shrinkage was taken as 4% and as such, the shrinkage factor was allowed to be taken as 1.042. However, it was also made clear in the said trade notice that where the actual shrinkage is significantly higher that the average of 4%, the general practice of working out the cost on the basis of actual shrinkage will continue." 5.4 From the above referred paras of the order of adjudicating authority the fallacy in reasoning adopted is quite evident. While the Trade Notice 46/2002, at para 4 stated "As regards, determination of shrinkage factor" in respect of processed fabrics the same has to be taken into consideration as part of raw material cost and the actual quantification done as per prevailing practice/ data. The cost of raw material would include all cost incurred for bringing the raw material to the premise of the job worker and this applies to all commodities." The said trade notice only provides for determination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the trade notice 65/2002 the duty payable should have been determined in the following manner, taking processing charges as B and rate of duty as R: Assessable Value of Processed Fabric = f X 1.042 + B Duty on processed fabric = (fX1.042 +B) X d X R = (f X 1.042 X d + B X d) X R = (Total Value of Grey Received + Total Processing Charges) X R 5.9 In terms of Trade Notice No 46/2002 the only change in the scheme of 65/2002 has been modified to take into account the actual quantification of shrinkage factor as per prevailing practice/ data. Further what has been indicated in bold is exactly what has been prescribed by the trade notice dated 31/3/2003. There is no dispute about the fact that duty has been paid by the appellants after determining the assessable value as per trade notice of 31.03.2003. When the total quantum of the grey fabric received has been taken into account while determining the landed cost of grey fabric then the shrinkage factor is part of the total value, and there cannot be further addition to the same. This view is also the view expressed by the larger bench of Tribunal in case of Ramkumar Mills Pvt Ltd [205 (183) ELT 356 (TLB)] "8. The Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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