C.N.B. Nair, Member (T) - (1.)ALL these appeals relate to a common dispute as to whether the various processing houses which are before us in appeal had paid duty correctly and fully in respect of grey fabrics processed by them. The period of demand is from 1997 to 2002. The demand has been raised by taking resort to proviso to Section 11A of the Central Excise Act and allegation has been made in the Show Cause Notice that the appellant -processors had suppressed facts relating to actual value of the processed fabrics which were cleared by them. In these circumstances, we heard all these appeals together and are disposing them of under this common order.
(2.)THE appellants received grey fabrics from various parties who entrusted the processing of those fabrics with the appellant -processors. The appellants carried out the processing, collected processing charges and returned the processed fabrics to the senders. Even though, the processing is broadly in the category of bleaching, dyeing and printing, there are differences with regard to the nature and quality of the processing carried out. These affect the rates of processing charge also. The processing charge is per metre.
During the relevant period, the appellants declared assessable values of the fabrics processed by them to the jurisdictional authorities, as the assessments were to be made on ad valorem basis. The computation of value was on the basis that the value of the processed fabric at the time of clearance from the appellants' factory would take in the value of the grey fabrics received processing charges and the administrative cost. In some cases, an addition of 15% was also made towards profit margin, even though the appellant -assessees had protested against such addition towards margin of profit. While the assessments were finalised on this basis, show cause notices were issued by the Central Excise authorities in August, 2002 alleging that there was short payment of duty. The main reason for this allegation was that, going by the rate of processing charges adopted, the weight (and consequently the price) of the grey fabrics received had been falsely declared and this had led to under valuation of processed fabrics. The basis for such an allegation was rate (processing) list of the processors. It was pointed out during the hearing that these rate lists were mostly of the year 2001 and these rates have been taken for the purpose of demanding duty from 1997. The rates indicated in the rate lists depended on the weight per metre of the fabric. In the case of Anand Syntex, Bhilwara, we find that the rate varied from Rs. 9.50 per metre to Rs. 17/ - depending upon variation in weight from 225 grams per metre 650 grams per meter. The impugned orders demand duty by taking the highest rate of processing charge (depending upon the weight of fabric) as well as by enhancing the value of grey fabric to the level appropriate for that weight. The valuation of the fabrics in question have been done by revising the price of the grey fabric consignments as well as the rate of processing charges. Thus, the impugned orders have rejected the grey fabric prices declared by the senders as well as the actual processing charges levied by the appellants.

(3.)THE appellants challenge the action of the Commissioner on merits as well as on the ground of limitation. On merits, the contention is that the procedure adopted by the Commissioner is entirely contrary to the judgment of the Apex Court in the case of Ujagar Prints Etc. Etc. v. Union of India and Ors., [1989 (39) E.L.T. 493 (S.C.)]. It is being pointed out that the rule laid down in the Ujagar Prints judgment is that the supplier of the grey fabrics shall make declaration of the price of the grey fabrics to the processor. The processor shall add his processing charges to the declared value of grey fabrics (so declared) and pay duty on the composite value. It is the appellants' submission that since the value of the grey fabrics supplied had been declared by the suppliers themselves, and since the appellant had adopted those values for the purpose of payment of duty, no responsibility lay with them to. determine the value of the grey fabric consignments independently of the declarations made by the grey fabric suppliers and that the revision of value and demand of differential duty on that basis is entirely contrary to the rule contained in the Supreme Court's judgments. It is also being pointed out that the re -determination of processing charges done by the Commissioner has no factual basis as they are contrary to the commercial invoices and the amounts of processing charges realised by the processors from the parties for whom processing were carried out. It is being submitted that further, they were also giving cash discounts. It has been asserted by the Counsel for the appellants that if valuation of the goods is made taking the commercially realised processing charges and the prices declared for grey fabrics, there would be no short -levy at all. The Counsels for the parties have emphasized that the present duty demand has no basis either in the rates charged by the parties or the amounts realised by them. It is entirely on a theoretical basis that processing rate for the year 2001 is to determine the weight and price of the grey fabrics and processing cost. The Counsel emphasized that the fallacious nature of the method adopted by the Commissioner would be clear from an examination of sample consignments. With regard to invoice No. 17 dated 2 -4 -2001 relating to processing of 5,96,460 Metres of fabric for M/s. New Tech Global Ltd. by M/s. Anant Syntex, the learned Counsel has shown that in that particular case, fabric from one lot had been supplied for different types of processes and rate of process charges varied from Rs. 4.75 to Rs. 15/ - per metre; but the learned Commissioner took the highest rates at Rs. 15/ - and re -worked the processing charge for the entire lot, over looking the fact that different lengths from the same lot had been subjected to different processes and depending upon the process involved, rates varied vastly. According to the learned Counsel, this example also showed the error in revising the price of the grey fabrics, inasmuch, as grey fabrics from the same lot cannot be of different weight or value, even though different portions of the same lot were subjected to differing processes with highly varying rates.