2006 (3) TMI 600 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought by the appellant in relation to duty and penalty amounts.
2. Enhancement of assessable value of cotton yarn due to transportation and handling charges.
3. Prima facie case analysis based on Cost Accountant's certificate.
4. Inconsistencies in the appellant's claims regarding inclusion of charges in assessable value.
5. Requirement for pre-deposit of duty amount and compliance deadline.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery for duty and penalty amounts related to the clearance of cotton yarn to their principal manufacturer. The duty demand arose due to the exclusion of transportation and handling charges from the assessable value during a specific period.

2. The appellate tribunal examined the records and found that the appellant's claim of a prima facie case was primarily based on a Cost Accountant's certificate. The certificate indicated the cost breakdown per kg of yarn cleared, including the basic price of cotton and purchase expenses. However, the tribunal noted that the certificate's inclusion of transportation and handling charges under "purchase expenses" was not convincing, as these charges were not directly related to the appellant's purchases from the principal manufacturer.

3. The tribunal highlighted inconsistencies in the appellant's statements, where they admitted the non-inclusion of transportation charges in the assessable value but claimed to have included handling charges. However, the tribunal found no documentary evidence supporting the inclusion of handling charges. The Cost Accountant's certificate was deemed ambiguous, and the appellant's admission of non-inclusion of transportation charges contradicted their own certificate.

4. Considering the lack of a prima facie case against the duty demand, the tribunal ruled that the appellant must pre-deposit the duty amount within four weeks and report compliance by a specified date. Failure to comply would result in the waiver of pre-deposit and stay of recovery only for the penalty amount, not the duty amount.

5. The tribunal's decision emphasized the importance of clear documentation and consistent statements in establishing a prima facie case for waiver of pre-deposit. The appellant's failure to provide sufficient evidence and the discrepancies in their claims led to the requirement for pre-deposit of the duty amount within a specified timeframe. Compliance with this directive would determine the waiver of pre-deposit and stay of recovery for the penalty amount.