KARMAYOGI DYEING PVT. LTD. AND ORS. Vs. CCE

JUDGEMENT

(1.) ALL these appeals except, one by Kamal Dye and Plastic Works are by Karmayogi Dyeing Pvt. Ltd. This appellant is a processor of fabrics. The notices issued to it alleged short payment of duty on the fabrics processed by it on job work. The basis for the allegation was that the value of the grey fabric which it processed, which formed a component in the assessable value of the processed fabric, had been underdeclared. This allegation was supported by statement of various persons who handed over the grey fabrics to the appellant for processing, accepting that the prices that they declared to the processor were lower than the actual prices than they paid for the fabrics. In reply to the show cause notice, the processor did not dispute that the value of fabrics was under declared but contended that it was not liable to pay duty and that liability fell upon the supplier of the grey fabric.

(2.) THE adjudicating authority accepted this argument to some extent. He said that the "merchant manufacturer", the owner of the fabric is in fact the manufacturer of the goods in terms of Section 2(f) of the Act and he "hires the labour of the independent processor for manufacture of excisable goods." But he noted that the "principal manufacturer" has authorised a processor, "who actually manufactured the excisable goods" to comply with the procedural formalities. He therefore concluded that the initial liability to duty will be on the "merchant manufacturer" and in case that person fails to discharge the duty, it will pass on to the processor. He found that the penalty could be imposed both on the principal manufacturer or the agent. He therefore imposed a penalty both on the supplier of the grey fabrics and under Rule 173Q(1)(a) on the processor. The Commissioner (Appeals) declined to interfere with these on appeal by the processor. He noted that the job worker was having the knowledge of the facts for justification of the penalty and dismissed the appeal. Hence these appeals.

(3.) THE departmental representative contends that the Asst. Commissioner noticed that in some case the appellant did not declare the goods at all and it therefore cannot be said that it had declared the value.