2009 (8) TMI 952 - AT - Central Excise

Summary

Issues involved: Confirmation of demand of differential duty u/s 4A of the Central Excise Act, 1944 for undervaluation of goods, waiver of pre-deposit amounts, interpretation of duty liability pre and post 1-6-2006.

The judgment pertains to a stay petition challenging the waiver of pre-deposit amounts including duty, education cess, penalty, and interest. The demand of differential duty arose due to undervaluation of goods under Section 4A of the Central Excise Act, 1944. The applicant contended that toothpaste with a toothbrush combo pack was undervalued, especially pre-1-6-2006 when the toothbrush was not covered by a notification u/s 4A. Post-1-6-2006, both toothpaste and toothbrush were covered, leading to duty discharge based on individual MRPs. The Revenue sought to tax the entire package value, alleging higher excise duty on toothpaste. The Tribunal noted prima facie waiver grounds for pre-1-6-2006 duty but required further examination post-1-6-2006 due to conflicting interpretations of Section 4A and MRP-based duty calculations.

The applicant argued that pre-1-6-2006 duty liability was unfounded as inserting duty-paid toothbrushes into toothpaste packs did not constitute manufacturing or deemed manufacturing. However, post-1-6-2006, toothbrushes were included in duty discharge under Section 4A, necessitating assessment based on individual MRPs. The Tribunal acknowledged the need for detailed analysis of Section 4A provisions and relevant case laws to determine duty liability post-1-6-2006. While granting a waiver for pre-1-6-2006 amounts, the Tribunal directed the applicant to deposit Rs. 10 lakhs within eight weeks for post-1-6-2006 duty, pending final hearing, with recovery stayed until appeal disposal.