2008 (11) TMI 586 - AT - Central Excise

Summary

Issues Involved:
Application for waiver of pre-deposit of duty and penalty based on inclusion of design and drawing charges in Assessable Value of goods manufactured.

Analysis:
The Applicants filed an Application seeking waiver of pre-deposit of duty and penalty. The demand was confirmed by adding the value of drawings and designs to the Assessable Value of the goods manufactured. The Applicants argued that they had already paid Rs. 7,00,000 at the time of the Appeal hearing by the Commissioner (Appeals). They further contended that during the disputed period, they were paying Service Tax for design and engineering charges, totaling about Rs. 25,00,000. On the merit, the Applicants claimed that charges for design and engineering should be included in the Assessable Value of the goods. They emphasized that being registered with the Service Tax Authorities and regularly paying Service Tax indicated no intention to evade duty.

The Tribunal found that design and drawing charges related to the manufactured goods should indeed be included in the Assessable Value. Considering the Service Tax payments made by the Applicants, the Tribunal directed them to deposit an additional amount of Rs. 17,00,000 within four weeks, in addition to the amount already deposited. Upon compliance with this direction, the pre-deposit requirement for the remaining duty, penalty, and interest would be waived. The Applicants were instructed to report compliance by a specified date.

This judgment highlights the importance of including design and drawing charges in the Assessable Value of goods manufactured. It also underscores the significance of complying with Service Tax obligations to demonstrate good faith and lack of intention to evade duty. The decision to waive pre-deposit for the remaining amount upon the specified additional deposit showcases a balanced approach by the Tribunal in addressing the issues raised by the Applicants.