PRAFFUL INDUSTRIES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE appeals have come up before us in Larger Bench on account of reference made by a bench consisting of two Members. The question to be dealt with in these appeals is whether relationship between the trader and the job worker will take the case of the assessee, job worker, out of the purview of the decision rendered by Their Lordships in Ujagar Prints v. Union of India 1988 (38) E.L.T. 535 as clarified by Their Lordships in 1989 (39) E.L.T. 493.

(2.) SHORT facts necessary for understanding the issue raised in these appeals are as follows :

(3.) SHOW cause notice was challenged by the assessee contending that they do job work not only for Ganga Ram Synthetics Ltd., Prafful Overseas Pvt. Ltd. and Prafful Exports but also for almost 200 other traders; that the charges recovered from all of them are the same and that Ganga Ram Synthetics Ltd. also got fabrics processed from other processors like the assessee and the rate which those job workers were charging was the same as that charged by the assessee. It was also contended that the price at which Ganga Ram Synthetics Ltd. sold the goods to dealers cannot be the basis for finding out the assessable value of the goods cleared by Prafful Industries Ltd. The fabrics on which job work was done were further printed and worked upon by Ganga Ram Synthetics Ltd. On these counts the action proposed in the show cause notice was disputed. On the question of relationship between the four concerns, namely, the assessee, Ganga Ram Synthetics Ltd., Prafful Overseas Ltd. and Prafful Exports, it was contended that it has to be established by the Department that the price charged from the related persons is a favoured price. In the absence of such favour being shown to the alleged related persons, the duty paid on the value of the processed goods must be taken to be the correct duty payable by the assessee.