COMMNR. OF CENTRAL EXCISE, INDORE vs. M/S.S. KUMARS LTD.

C.A. No.-004172-004185 - 2000Supreme Court21 November 20059 pages
For Respondent: M. P. DEVANATH
AI SummaryRemanded

What did the Supreme Court hold?

The Supreme Court held that the Tribunal wrongly applied the principles of M/s. Ujagar Prints III without considering the relationship between the parties. The matter was remanded to the Tribunal to determine if the respondents were related persons and then to consider claims for discounts and deductions.

What were the facts?

The respondent processed grey fabrics, sometimes on its own account and sometimes on job work for merchant manufacturers. The excise duty was calculated differently for these two scenarios, relying on different Supreme Court judgments. A show cause notice was issued for differential duty and penalty, alleging related party transactions.

What were the issues?

Whether the valuation of processed fabrics for excise duty purposes should be based on the principles laid down in M/s. Ujagar Prints III, and whether the parties involved were related persons.

Which sections of the Income-tax Act were involved?

Section 4,Section 11A

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Cases cited in this judgment(3)Show list

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9 CASE NO.: Appeal (civil) 4172-4185 of 2000 PETITIONER: Commnr. of Central Excise, Indore RESPONDENT: M/s S. Kumars Ltd. & Ors. DATE OF JUDGMENT: 21/11/2005 BENCH: Ruma Pal & H.K. Sema

JUDGMENT: J U D G M E N T With C.A. Nos. 775-781 of 2004 RUMA PAL, J.

The respondent No. 1 processes grey fabric. Sometimes the grey fabrics are processed on its own account and sometimes the grey fabrics are received for processing on job charge basis from others (who are referred to as ’the merchant manufacturers). For the period 01.09.1985 to 28.02.1989, the respondent No. 1 had paid excise duty on the fabrics processed by it during this period, calculating the duty payable by treating the value of the processed fabrics as being that at which the merchant manufacturer was selling the processed goods. According to the respondents, this was in keeping with the decision of this Court in Empire Industries Ltd. V. Union of India & Ors. (1985) 3 SCC 314 (briefly referred to as Empire Industries). With effect from 01.03.1989, the same method was followed in respect of the fabrics processed by the respondent No.

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