UJAGAR PRINTS ETC. ETC.versusUNION OF INDIA & ORS.

A                      UJAGAR PRINTS ETC. ETC.
                                  v.
                        UNION OF INDIA & ORS.

                             JANUARY 27, 1989
B
            [R.S. PATHAK, CJ, SABYASACHI MUKHARJI,
          S. NATARAJAN, M.N. VENKATACHALIAH AND
                      S. RANGANATHAN, JJ.]

          Central Excises and Salt Act, 1944/Central Excise Rules, 1944:
    Sections 2(f), 4/Rule 179-Processed fabric-Assessable value-
C   Determination of-Judgment of the Court dated November 4, 1988-
    Clarified.

         On a civil miscellaneous petition for clarification of this Conrt's
    jndgment dated 4th November, 1988, the Court.
D
          HELD: The assessable value of the processed fabric would be the
    value oftbe grey-cloth in the hands ortbe processor plus the value of the
    job-work done plus manufacturing profit and manufacturing expenses
    whatever these may be, which will either be included in the price at the
    factory gate or deemed to be the price at the factory gate for the proces-
    sed fabric. [34SD-E]          '
E
          The factory gate means the "deemed" factory gate as if the pro-
    cessed fabric was sold by the processor. [345E]

          If the trader, who entrusts cotton or man-made fabric to the
    processor for processing on job-work basis, would give a declaration to      )
F
    the processor as to what would be the price at which he would be selling
    the processed goods in the market, that would be taken by the Excise
    authorities as the assessable-value of the processed fabric and excise
    duty would be charged to the processor on that basis. Such a declara-
    tion would inclnde only the price or deemed price at which the proces-
    sed fabric wonld leave the processor's factory plus his profit. It is
G
    necessary to include the processor's expenses, costs and charges plus
    profit, but not the trader's profits who gets the fabrics processed, be-
    cause those would be post-manufacturing profits. [34SG-H; 3468-C]


         ORIGINAL JURISDICTION: Civil Miscellaneous Petition
H   No. 32937of1988.

                                       344
                              UJAGAR PRINTS v. U.0.1.                        34·5

                                          IN
                                                                                     A
            Writ Petition No. 12183 of 1985.

            (Under Article 32 of the Constitution of India).

            K.K. Venugopal, Mrs. Jayashree Wad and Mrs. Aruna Mathur                 B
      for the Petitioners.

           K. Parasaran, Attorney General, A.K. Ganguli, P. Parm es-

~-.
      waran and K. Swamy for the Respondents.

            The following Order of the Court was delivered:
                                                                                     c
                                     ORDER
lif
            In respect of the civil miscellaneous petition for clarification of
      this Court's judgment dated 4th November, 1988, it is made clear that
      the assessable value of the processed fabric would be the value of the         D
      grey-cloth in the hands of the processor plus the value of the job-work
      done plus manufacturing profit and manufacturing expenses whatever
      these may be, which will either be included in the price at the factory
      gate or deemed to be the price at the factory gate for the processed
)<,
      fabric. The factory gate here means the "deemed" factory gate as if
      the processed fabric was sold by the processor. In order to explain the        E
      posiiion it is made clear by the following illustration: if the value of the
      grercloth in the hands of the processor is Rs.20 and the value of the
      job-work done is Rs.5 and the manufacturing profit and expenses for
      the processing be Rs.5, then in such a case the value would be Rs.30,
~-    being the value of the grey-cloth plus the value of the job-work done
~     plus manufacturing profit and expenses. That would be the correct              F
      assessable-value.

            If the trader, who entrusts cotton or man-made fabric to the
      processor for processing on job-work basis, would give a declaration to
      the processor as to what would be the price at which he would be
      selling the processed goods in the market, that would be taken by the          G
      Excise authorities as the assessable-value of the processed fabric and
      excise duty would be charged to the processor on that basis provided
"     that the declaration as to the price at which he would be selling the
      processed goods in the market, would illclude only the price or
      deemed price at which the processed fabric would leave the proces-
      sor's factory plus his profit. Rule 174 of the Central Excise Rules, 1944      H
    346                    SUPREME COURT REPORTS            I1989) 1 S.C.R.
A   en joins that when goods owned by one person are manufactured by
    another the information is required relating to the price at which the
    said manufacturer is selling the said goods and the person so autho-
    rised agrees to discharge all the liabilities under 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
B
    done plus the manufacturing profit and the manufacturing expenses
    but not any other subsequent profit or expenses. It is necessarv 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 pro-
    cessed, because those would be post-manufacturing profits.

c
    N.P.V.