2005 (5) TMI 440 - AT - Central Excise

Summary

Issues:
1. Stay of recovery of duty and penalty.
2. Time-barred show cause notices.
3. Interpretation of Central Excise Valuation Rules.
4. Applicability of Rule 5 on transportation charges.
5. Waiver of pre-deposit.

Analysis:
1. The applicants sought a stay on the recovery of duty and penalty amounting to Rs. 6,32,083/- and Rs. 50,000/- respectively. They argued that certain show cause notices were time-barred as they were issued after a period of one year without alleging any suppression. The differential duty was demanded based on transportation charges collected in excess of those actually incurred. The Revenue contended that only transportation charges actually incurred are deductible under Rule 5 of the Central Excise Valuation Rules.

2. The Tribunal examined Section 4(1)(a) and Rule 5 of the Central Excise Valuation Rules, 2000. It was established that Rule 5 applies when goods are delivered at the destination with transportation charges included in the price, and the goods are not offered for sale at the factory gate. In cases where the ex-factory price is available, manufacturers can charge transportation fees if agreed upon by the purchaser. In this instance, the purchaser agreed to pay transportation charges, justifying the deduction claimed by the applicants. Consequently, the Tribunal found the case favored the applicant.

3. Considering the arguments presented, the Tribunal granted a stay on the recovery of duty and penalty pending the appeal's hearing, along with a waiver of pre-deposit. The stay application was disposed of accordingly, and the appeal was scheduled for a final hearing in due course.