2006 (3) TMI 352 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty in a case involving the manufacture of computer monitors and availing Modvat credit.

Analysis:
The appellant filed applications seeking waiver of pre-deposit of duty amounting to Rs. 16,11,66,542/- along with an equal penalty. The applicants, engaged in manufacturing computer monitors, avail Modvat credit for inputs used in production. Some monitors are cleared with computers without duty payment, as computers are exempt. The Revenue demands duty at 8%/10% of the monitor price cleared without duty payment. The applicant's argument is that they paid duty monthly and reversed credit for inputs used in duty-exempt monitors, totaling around Rs. 4.06 crores. They contend the duty calculation, considering computer system value, is incorrect as the demand pertains to monitors only.

The Tribunal, led by Vice-President S.S. Kang, found the applicant's case strong prima facie. Noting the demand is for monitors, not computer systems, the Tribunal deemed the duty calculation based on computer system value unsustainable. Consequently, the Tribunal waived the pre-deposit of the entire duty amount, allowing the stay petitions. The decision was dictated and pronounced on 1-3-2006.

This judgment highlights the importance of accurate duty calculation based on the relevant product and not including unrelated components. The Tribunal's decision to waive the pre-deposit reflects a consideration of the applicant's argument and the discrepancy in duty calculation methodology. The case underscores the significance of proper assessment and application of duty regulations in manufacturing scenarios involving multiple components and exemptions.