2011 (6) TMI 270 - HC - Central Excise

Waiver of pre-deposit - The issue involved pertains to the inclusion of the value of scrap retained by the Appellant while doing job work for Tata Motors Ltd. According to the Department, the scrap generated out of the raw material supplied by Tata Motors Ltd. was retained by the Appellant, which was sold on payment of duty - According to the Department, the job work charges were depressed due to retention of the value of scrap generated out of freely supplied raw materials - As such the judgment of the Supreme Court in International Auto Ltd. vs. Commissioner of Central Excise, (2005 -TMI - 47297 - SUPREME COURT OF INDIA) a prima facie case had been made out by the Appellant and a waiver of predeposit was accordingly warranted.

Summary

Issues:
1. Application for waiver of predeposit under Section 35F of the Central Excise Act, 1944.
2. Inclusion of the value of scrap retained by the Appellant during job work for Tata Motors Ltd.
3. Justification of the Appellate Tribunal's direction to predeposit Rs.30,57,319.
4. Prima facie case for total waiver of duty, interest, and penalty.

Analysis:

1. The appeal originated from a decision of the Customs, Excise and Service Tax Appellate Tribunal concerning an application for the waiver of predeposit under Section 35F of the Central Excise Act, 1944. The Tribunal directed the Appellant to deposit the balance amount of Rs.30.57 lakhs after considering the total demand for duty of Rs.46.36 lakhs, with credit already adjusted at Rs.15.79 lakhs.

2. The dispute primarily revolved around the inclusion of the value of scrap retained by the Appellant while performing job work for Tata Motors Ltd. The Department alleged that the Appellant sold the scrap generated from raw materials supplied by Tata Motors Ltd., impacting the job work charges. The Tribunal found no prima facie case and instructed the Appellant to pay the remaining duty amount.

3. The appeal raised significant legal questions regarding the Appellate Tribunal's decision to direct the predeposit of Rs.30,57,319 under Section 35F of the Act. The Appellant argued for a waiver based on precedents and judgments supporting their case, emphasizing the need for a prima facie evaluation of the situation.

4. Another critical issue was whether the Appellant established a prima facie case for a total waiver of duty, interest, and penalty. Citing a relevant judgment by the Supreme Court, the Appellant contended that their situation aligned with the principles outlined in the case law, warranting a waiver of predeposit. The High Court, considering the precedents and the merits of the case, granted the appeal, modifying the Tribunal's order by waiving the predeposit requirement for the remaining balance.

In conclusion, the High Court allowed the appeal, noting the payment already made by the Appellant and the supportive legal precedents. The judgment emphasized the importance of evaluating prima facie cases and ensuring justice in matters of duty waivers, ultimately ruling in favor of the Appellant and modifying the Tribunal's decision.