MAHESH INDS. LTD. Vs. CCE

JUDGEMENT

(1.) The Appellant is a job worker processing gray fabrics. A number of show cause notices were issued. The common allegation was that the assessee had not taken into account the fact of shrinkage in the fabrics after conversion. It was alleged that this had resulted in short levy. Total Duty amounting to Rs. 17,34,761.85 was demanded and it was alleged that the assessees were liable to penalty.

(2.) Before the Commissioner the assessee argued that the Proforma for declaration was to be made by Merchant Manufacturer, which did not provide for the fact of shrinkage. It was claimed that the fact of shrinkage was mentioned in the Quarterly Returns in the R.T. 5 format. It was claimed that the Show Cause Notices were hit by limitation in as much as the Notices made on identical grounds earlier were pending disposal.

(3.) The Commissioner passed Orders. He held that shrinkage of the fabrics during the course of processing amounted to 'manufacturing expenses' and became addable to the values in terms of the Supreme Court Judgment in the case of Ujagar Prints. He established suppression on the observation the this item of expenses was not entered in their declaration. He justified imposition of penalty relying upon the Gujarat High Court Judgment in the case of Maheshwari Mills Ltd. . In this belief he confirmed the duty of Rs. 17,34,761/ - and imposed an equal amount of Penalty upon them. The appeal arises out of this Order.