RAVI STEEL INDUSTRIES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THERE are three appeals filed by M/s. Ravi Steel Industries, Shri D.G. Agarwal and Shri S.B. Yadav against Order -in -Original No. 03/KKS/2004 -2005, dated 4 -8 -2004 passed by Commissioner of Central Excise, Mumbai -III. Vide the impugned order, the adjudicating authority has confirmed a duty demand of Rs. 1,64,696/ - along with interest thereon being the differential duty leviable on "Velvet Fabrics" allegedly manufactured by the appellant and has also imposed penalties on the appellant and its partner Shri Deepak G. Agarwal and Shri S.B. Yadav, Excise -in -charge. In the same order, the Commissioner has dropped the demand of excise duty on the 4% notional profit required to be added to the processing charges as proposed in the show cause notice on the ground that the processing charges collected includes the profit elements and therefore, there is no need to make further addition towards profit. While M/s. Ravi Steel Industries and its partner and excise -in -charge are aggrieved of the confirmation of demand in respect of the velvet fabrics allegedly manufactured by the appellant and cleared without proper payment of duty and the penalties imposed on them, Revenue is aggrieved of the dropping of duty demand on the 4% notional profit required to be added to the assessable value.

(2.) THE learned Counsel for the appellant submits that as per the statement recorded from the Dyeing Master of the appellant firm, the appellant did not have any facility for processing of velvet fabrics. Further, the fabrics which were processed and cleared by the appellant under the invoice numbers mentioned in the show cause notice, there is no reference to any velvet fabrics cleared by them. The samples of said fabrics drawn by the appellant and sent to SASMIRA also shows that the fabrics cleared do not satisfy the description of velvet fabrics. Therefore, the confirmation of differential duty demand by classifying the fabrics manufactured by the appellant as "velvet fabrics" falling under CETH 5801 is not sustainable in law. As regards the dropping of demand of 4% notional profit he submits that the appellant is liable to pay duty on the consideration received. Therefore, the processing charges received by the appellant are relevant for determination of assessable value. Addition of notional profit sought to be made in the present case is not provided for in the law and therefore, the adjudicating authority has correctly concluded that 4% notional profit is not addable to the assessable value.

(3.) WE have carefully considered the submissions made by both the sides.