9911796707
TMI Blog2003 (11) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant proposed inclusion in the value for assessment of the steel of the proceeds of sale of the scrap that arose between 1st February 2000 and 31st January 2002. The Additional Commissioner after considering the cause shown and hearing the assessee, confirmed the proposal in the notice and imposed penalty. His order having been confirmed on appeal by the Commissioner (Appeals), the assessee is in appeal before us. 2. The representative of the appellant contends that the price received by the appellant for sale of the scrap ought not to form part of the value of the assessment. In arriving at the cost of the manufacture of the goods, the price obtained by the sale of such scrap or by-product would have to be deducted from the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by a job worker to be additional consideration and so includable in the assessable value of the goods. He further contends that while the prices of the scrap may be a deduction to the supplier raw material, it would not be so in the case of the job worker. To the latter, it is not a deduction because the material did not belong to him. 4. As a matter of general accounting principle, while determining the cost of manufacture of any article, the price obtained by sale of scrap for similar material that arises during its manufacture, would be deducted. The cost of manufacture of any article is the cost that the manufacturer has to incur in order to produce it from out of the raw material or components required. Such cost would be the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent in the case of the job worker and in the case of the person who manufactures the goods on his own account. Both sides were agreed that it is the principles contained in the clarificatory order of the Supreme Court in Ujagar Prints that would apply in the case of manufacture of a job worker. In that order the Court had said that the assessable value of processed fabric would be "deemed to be the price at the factory gate for the processed fabric" and went on to explain that "the factory gate here means the "deemed" factory gate as if the processed fabric was sold by the processor." The order requires inclusion in the assessable value of job work of the value of raw material the processing charges and the profit of the job worker. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be accepted. It would follow that the assessable value for each of the two co-products would be Rs. 10,000/- in addition to the manufacturing charges and manufacturing profit, which we will assume in each case to be Rs. 5,000/-. It will then follow that the manufacturing cost would be Rs. 15,000/- x 2 i.e. Rs. 30,000/-. In other words, the cost of manufacture of each product would be Rs. 15,000/- and the total manufacturing cost Rs. 30,000/-. This would result in an absurd situation of the raw material cost being calculated twice over. 6. We are not able to see exceptions to this general rule. The job worker may decide to reduce his job charges or profit in order to gain a long term com-mercial advantage by pleasing a customer from whom he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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