- (1.) THIS batch of civil appeals filed by the Department is directed against the judgment and order dated 4th April, 2001 passed by CEGAT, New Delhi in appeal No. E/489-498/2000-A.
(2.) THE main issue which arose for determination before the tribunal was whether rajasthan Spinning and Weaving Mills Ltd. (RSWML) was the real manufacturer who carried out textile processing from its process house at Mordi and if so whether the Department was right in invoking best judgment assessment in terms of Rule 7 of Central Excise (Valuation) Rules, 1975 (1975 Rules for short ). Rswml are the manufacturers of yarn and fabric. It had set up a process house at Mordi in 1994-95. The process house was set up for processing their fabric. The woven fabrics manufactured at their weaving unit was processed on job work basis by Mordi processing house. This was with effect from 29th March, 1995. On 16th June, 1995 the said process house was let out by Rswml to Bhilwara Spinners limited (BSL ). Later on the lease agreement between Rswml and BSL stood terminated and the process house was leased out to Purvi Fabrics and Textures (PFTL ). The above arrangement was doubted by the Department. Therefore, the Department issued show cause notice dated 22nd September, 1998 claiming differential duty from RSWML for the period from 16th June, 1995 to February 20, 1996 principally on the ground that the real manufacturer was RSWML and that the above arrangement of lease was a sham as it was arrived at to change the basis of valuation/ assessment of fabrics processed from "comparable goods basis/method" to "cost method".
(3.) ON factual analysis the tribunal came to the conclusion that the lease agreement referred to above was genuine and, therefore, RSWML was right in invoking the cost method under Rule 6 (b) (ii) of the said 1975 Rules. According to the tribunal the present case stood covered by the judgment of this Court in the case of Ujagar Prints and Ors. vs. Union of India and Ors. , AIR 1989 SC 972 [ (1989) 3 SCC 531]. At the outset we may point out that the question of valuation was not examined by the tribunal. Even if we are to proceed on the assumption that the tribunal had erred, we are still not inclined to interfere in this matter for the reasons given hereinafter mentioned. We are, therefore, proceeding on the basis that RSWML is the real manufacturer and that the lease was a sham.;