2007 (3) TMI 590 - AT - Central Excise

Summary

Issues: Central Excise duty demand, Education Cess imposition, penalty under Section 11AC, waiver of pre-deposit, stay of recovery, valuation of goods under Section 4 A of the Central Excise Act.

Central Excise Duty Demand and Penalty:
The judgment involved a case where the Commissioner demanded Central Excise duty exceeding Rs. 1 crore and Education Cess of over Rs. 2 lakhs from the appellants for the period January-November 2005. Additionally, a penalty of over Rs. 1 crore under Section 11AC was imposed. The appellants sought waiver of pre-deposit and stay of recovery for the duty and penalty amounts. The appellants were manufacturing two products, a 'Mosquito repellant liquid' and a 'Vapourising device,' cleared in a single pack with an MRP of Rs. 36. The issue arose when the adjudicating authority included the cost of the vapourising device in the assessable value of the goods under Section 4 of the Act, leading to the demand. The Tribunal noted that the case was similar to a previous decision where a pack containing 'gel' and 'shampoo' was held liable for valuation under Section 4 A, even though one item was supplied free. The Tribunal found a prima facie case for the appellants and granted waiver of pre-deposit and stay of recovery for the duty and penalty amounts.

Valuation of Goods under Section 4 A:
The key argument revolved around the valuation of the goods under Section 4 A of the Central Excise Act. The appellants contended that despite supplying the vapourising device free, the entire pack containing the device and the mosquito repellant liquid should be valued based on the MRP of the liquid repellant under Section 4A. This argument was supported by a previous decision involving a similar scenario. The Tribunal differentiated the present case from other cases cited by the Respondent, where goods were cleared as free items in a single pack by the principal manufacturer. The Tribunal found the appellants' case analogous to the previous decision and granted waiver of pre-deposit and stay of recovery due to the high stakes involved in the case.

Conclusion:
The judgment by the Appellate Tribunal CESTAT, Chennai addressed the issues of Central Excise duty demand, Education Cess imposition, penalty under Section 11AC, waiver of pre-deposit, stay of recovery, and the valuation of goods under Section 4 A of the Central Excise Act. The Tribunal found in favor of the appellants, granting waiver and stay of recovery for the duty and penalty amounts based on the prima facie case presented and the similarity of the case to a previous decision. The detailed analysis provided clarity on the interpretation of relevant legal provisions and their application to the specific circumstances of the case, ensuring a fair and just outcome.