2010 (12) TMI 986 - AT - Central Excise

Penalty - Waiver of pre-deposit - appellant paid the duty on the normal transaction value, that is transaction value of the goods to other independent buyers, while according to the Department, the duty should have been paid on the basis of 110% of the cost of production in terms of Rule 8 of the Central Excise Valuation Rules, 2000 - Held that - Duty has been demanded by invoking proviso to Section 11A(1), but there does not appear to be any evidence indicating that the appellant had suppressed the relevant facts with intent to evade payment of duty - when the duty paid by the appellant in respect of the goods cleared from their factory was available as Cenvat credit to their factory located at Bahadurgarh, Haryana, there could not be any intention on the part of the appellant to evade the payment of duty. As the major part of duty demand is also hit by limitation, there is substance in the appellant s plea for waiver from the requirement of pre-deposit of duty demand, interest and penalty. The stay petition is allowed.

Summary

Issues:
Application for waiver from pre-deposit of duty demand, interest, and penalty under Central Excise Act, 1944 upheld by Commissioner (Appeals) against appellant - Dispute over assessable value of base paper cleared by appellant's factory to another unit - Invocation of longer limitation period under proviso to Section 11A(1) - Correctness of duty payment basis - Appeal against Assistant Commissioner's order.

Analysis:
The case involves an application for waiver from pre-deposit of duty demand, interest, and penalty under the Central Excise Act, 1944, which was upheld by the Commissioner (Appeals) against the appellant. The dispute revolves around the assessable value of base paper cleared by the appellant's factory to another unit. The appellant had paid duty based on the normal transaction value, while the department contended that duty should have been paid on the basis of 110% of the cost of production as per Rule 8 of the Central Excise Valuation Rules, 2000.

The Tribunal noted that a Larger Bench ruling in the case of Ispat Industries Ltd. v. CCE, Raigad held that duty for goods cleared for captive consumption should be based on the price to independent buyers. Since the appellant had sales to independent buyers, the duty paid for clearances to the other unit for captive consumption was deemed correct. The appellant's argument that duty calculated based on 110% of the cost of production would exceed the duty paid was not considered by the Commissioner (Appeals).

Moreover, the Tribunal found no evidence that the appellant had suppressed facts to evade duty payment, questioning the invocation of the longer limitation period under proviso to Section 11A(1). Citing the judgment in Jay Yuhshim Ltd. v. CCE, New Delhi, the Tribunal concluded that since duty paid by the appellant was available as Cenvat credit to the other unit, there was no intent to evade payment.

Therefore, the Tribunal granted the appellant's plea for waiver from pre-deposit, waiving the requirement of duty demand, interest, and penalty for the appeal's hearing, with recovery stayed during the appeal's pendency. The stay petition was allowed, and the operative portion of the order was pronounced in court.