Sidharth Processors Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. application is for waiver of deposit of duty of rs. 1.04 lakhs arrived at by the addition of some elements towards "manufacturing expenses" and "manufacturing profit" which the assistant commissioner (whose order has been confirmed by the commissioner (appeals) felt ought to be added to the cost of job work declared by the applicant for processing grey fabrics received by it as a job worker.3. the applicant has declared rs. 3.30 per metre as processing charges, and added another rs. 3.68 per metre. it was explained that this addition was to provide for unforeseen eventualities.since this amount would be difficult to be recovered from the supplier of the raw material after completion of the job work. there are decisions of this tribunal to say that unless the contrary is shown the cost of manufacturing expenses declared must be considered to be included in the profit of the processors (richardson & cruddas (1972) ltd. v. cce 1999 (31) rlt 814). prima facie therefore the addition of 4% recovered as profit, which the assistant commissioner seems to consider the profit of the merchant that is the raw material owner is not maintainable so also the addition on account of octroi, transport and shrinkage. apart from the fact that these are stated to be approximation they would prima facie fall within rs. 2.68 declared as 10% of the processing charges by the applicant. the assistant commissioner's order prima facie runs on the assumption and unsupported by any evidence that in addition to the total of the charges declared by the applicant, other expenses have been incurred which must be included. apart from this, there is also no reason shown as to why the chartered accountant's certificate which supports , the applicant is not acceptable. in these circumstances, we waive deposit of the duty and stay its recovery.

Judgment:
1. Application is for waiver of deposit of duty of Rs. 1.04 lakhs arrived at by the addition of some elements towards "manufacturing expenses" and "manufacturing profit" which the Assistant Commissioner (whose order has been confirmed by the Commissioner (Appeals) felt ought to be added to the cost of job work declared by the applicant for processing grey fabrics received by it as a job worker.

3. The applicant has declared Rs. 3.30 per metre as processing charges, and added another Rs. 3.68 per metre. It was explained that this addition was to provide for unforeseen eventualities.

Since this amount would be difficult to be recovered from the supplier of the raw material after completion of the job work. There are decisions of this Tribunal to say that unless the contrary is shown the cost of manufacturing expenses declared must be considered to be included in the profit of the processors (Richardson & Cruddas (1972) Ltd. v. CCE 1999 (31) RLT 814). Prima facie therefore the addition of 4% recovered as profit, which the Assistant Commissioner seems to consider the profit of the merchant that is the raw material owner is not maintainable so also the addition on account of octroi, transport and shrinkage. Apart from the fact that these are stated to be approximation they would prima facie fall within Rs. 2.68 declared as 10% of the processing charges by the applicant. The Assistant Commissioner's order prima facie runs on the assumption and unsupported by any evidence that in addition to the total of the charges declared by the applicant, other expenses have been incurred which must be included. Apart from this, there is also no reason shown as to why the Chartered Accountant's certificate which supports , the applicant is not acceptable. In these circumstances, we waive deposit of the duty and stay its recovery.