2011 (7) TMI 1163 - AT - Central Excise

Summary

Issues involved: Total waiver of pre-deposit of duty, inclusion of Design and Engineering charges in assessable value, price escalation post-clearance, financial hardship claim.

Design and Engineering Charges: The appellant sought total waiver of pre-deposit of duty amounting to Rs. 12,80,41,204, with a major demand of Rs. 2,73,49,362 confirmed due to inclusion of Design and Engineering charges in the assessable value of manufactured goods. The appellant argued that these charges were related to setting up the plant at customers' place and not part of the manufacturing process. However, the Tribunal found no evidence supporting this claim, stating that goods like boilers require design and hence the charges are to be added to the assessable value.

Price Escalation Post-Clearance: Another demand of Rs. 6,60,06,730 was confirmed on the basis of price escalation of goods after clearance as per customer agreements. The appellant issued proforma invoices for the enhanced prices, but failed to provide sufficient evidence for total waiver of duty on this demand. The Tribunal noted that the appellant's financial hardship claim was supported by a communication from the Ministry of Heavy Industries and Public Enterprises regarding a proposed transfer of the appellant's units to BHEL.

Financial Hardship Claim: The appellant relied on the decision of the Hon'ble Supreme Court in the case of Sangfroid Remedies Ltd. vs. UOI, where waiver was granted on grounds of financial hardship. The Tribunal, considering the financial hardship and interest of revenue, directed the appellant to deposit Rs. 2 crores within eight weeks, with the balance amount of duty waived subject to compliance. The recovery of the balance amount was stayed pending the disposal of the appeals.

Conclusion: The Tribunal emphasized the need for evidence to support claims, as seen in the lack of proof for the Design and Engineering charges being at the customers' end. The decision highlighted the importance of balancing financial hardship with revenue interests, as per the provisions of the Central Excise Act and relevant judicial precedents.