1985 (5) TMI 219 - AT - Central Excise

Summary

Issues:
1. Consideration of value of packing in assessable value calculation under the Central Excises and Salt Act, 1944.
2. Barred time limit for issuing show cause notice.
3. Prima facie case for appeal and undue hardship due to deposit requirement.
4. Existence and independence of the Applicant as a unit of M/s. Modi Industries.
5. Interpretation of undue hardship in relation to deposit requirement under the Act.

Analysis:
1. The primary issue in the case was the inclusion of the value of packing supplied by the buyer in the assessable value calculation under the Central Excises and Salt Act, 1944. The Collector had imposed duty and penalty based on this inclusion, which was challenged by the Applicant citing contrary decisions from the Bombay High Court and the Government of India.

2. Another issue raised was the time limit for issuing the show cause notice, which the Applicant argued was barred by time. This was presented as a ground for challenging the demand made by the Collector.

3. The Applicant contended that they had a strong prima facie case for appeal based on legal precedents and that the deposit requirement of duty and penalty would cause undue hardship. Financial difficulties were emphasized, including the Applicant's limited profit margin and tight liquidity position.

4. The judgment also addressed the issue of the Applicant's independence as a unit of M/s. Modi Industries, highlighting that the undue hardship assessment should be based on the owner's financial position rather than solely on the unit's liquidity.

5. The interpretation of "undue hardship" in the context of the deposit requirement under the Act was extensively discussed. The judgment emphasized that undue hardship refers to grave financial difficulties in complying with the deposit condition, and factors like a prima facie case or balance of convenience should not be considered in determining undue hardship.

In conclusion, the Application for Stay was dismissed based on the court's interpretation of undue hardship and the specific context of the Act's deposit requirement, emphasizing the need for grave financial difficulties to be present to qualify as undue hardship.