2008 (2) TMI 676 - AT - Central Excise

Summary

Issues:
Application for waiver of pre-deposit of duty and penalty amounting to Rs. 5,36,72,253/- imposed by the Commissioner.

Analysis:
1. Issue of MRP based assessment: The case involved a dispute regarding the assessment of duty on base material for paints under Section 4A of the Central Excise Act, 1944. The applicant argued that the base material should be assessed on the basis of Maximum Retail Price (MRP) under Notification No. 13/2002-C.E. (N.T.). The contention was based on the argument that the base material falls under the category of paints notified under the Standards of Weights and Measures Act, 1976. The advocate highlighted Rule 5 of the Packaged Commodities Rules, 1977, which specified that paints should be sold in standard packages, thus making MRP assessment applicable. However, the applicant failed to provide evidence that the base material was actually sold at retail prices, leading to doubts about the applicability of MRP assessment.

2. Invocation of extended period: The Revenue contended that an exemption order was issued for the base material, indicating that it was not sold at retail and therefore not covered by the Packaged Commodities Rules, 1977. The Revenue argued that the extended period was rightly invoked due to the applicant's alteration of the basis for determining the value of the base paints without informing the authorities. It was alleged that the applicant created an artificial MRP to evade duty, as there was no actual retail sale of the base material at the indicated prices. This intentional evasion of duty led to the invocation of the extended period for assessment.

3. Decision and Direction: After considering the submissions, the Tribunal found that the applicant failed to establish a prima facie case in their favor. The lack of evidence supporting retail sales of the base material raised doubts about the applicability of MRP assessment. Additionally, the Tribunal rejected the plea of limitation, as the applicant had altered the basis for determining the value of the base paints without disclosing it to the authorities. Consequently, the Tribunal directed the applicant to deposit Rs. 2.5 crores within twelve weeks towards duty, with a stay on the recovery of the remaining amount pending the appeal's disposal. Failure to comply would result in the dismissal of the appeal without further notice.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's decision, providing a comprehensive understanding of the case.