K.G. NAIDU MILLS Vs. CCE

JUDGEMENT

(1.) M /s. K.G. Naidu Mills (KGNM) and M/s. K.G. Denim Ltd., (KGDL) are related persons for the purpose of valuation under Section 4 of the Central Excise Act, 1944 (the Act). During the period July, 2000 to June, 2001, KGNM manufactured cotton yarn on job work basis for KGDL. They paid duty on the goods manufactured on job work basis following the formula prescribed by the Apex Court in the case of Ujagar Prints v. Union of India reported in 1989 (39) ELT 493 (S.C).

(2.) A Show Cause Notice was issued to the appellants proposing to re -determine the duty liability on the basis of the assessable value in terms of Rule 9 of the Central Excise Valuation (Determination of price of excisable goods) Rules, 2000 (CEVR). After due process of law, the original authority dropped the demand proposed on the basis that Rule 9 of CEVR governed the determination of assessable value of clearances made by the appellants. However, he confirmed a differential duty demand of Rs. 7,68,456/ - and the appropriate interest thereon under Section 11AB of the Act.

(3.) IN the impugned order, the Commissioner (Appeals) has upheld the order of the original authority. He found that it was incorrect to abate the proceeds of waste that arose in the process of manufacture and returned to the principal manufacturer in working out the assessable value.