2011 (9) TMI 775 - HC - Central Excise

Waiver of pre-deposit - valuation - inclusion of advertisement expenses - undue hardship - held that - The Tribunal has taken a view on merits in respect of the earlier period that such expenses incurred by the dealers of the Petitioner in promoting sale are to be included in the assessable value/transaction value of the goods. Therefore the petitioner has made out a case for waiver of the amount of entire duty before its appeal is entertained for the subsequent period. The impugned order of the learned Tribunal while not waiving of pre-deposit in terms of Section 35F of the Central Excise Act 1944 of entire duty demanded from the petitioner causes undue hardship to the petitioner.

Summary

Issues:
Challenge to order of Customs, Excise & Service Tax Appellate Tribunal regarding waiver of pre-deposit of duty amount for Advertisement Expenses under Joint Advertisement and Sales Promotion Policy.

Analysis:
The High Court addressed the challenge in the writ petition against the order of the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal) dated 26-7-2011. The Tribunal had declined the petitioner's request for waiver of pre-deposit of the duty amount and ordered the entire duty demand to be deposited within 8 weeks from the order date. The appeal before the Tribunal pertained to Advertisement Expenses incurred by the dealers of the petitioner under the Joint Advertisement and Sales Promotion Policy, claimed as additional consideration for sale and added to the assessable value for the period October 2007 to March 2008.

The petitioner highlighted that the Tribunal had previously considered advertisement expenses towards assessable value in the petitioner's case for the period from July 2000 to March 2005. The Tribunal had accepted the appeal of the assessee in an earlier order dated 12-8-2008. The Revenue was in appeal against this order. The respondent's counsel did not contest the fact that in earlier orders, the Tribunal had found such expenses to be included in the assessable value/transaction value of goods.

The Tribunal had already decided in favor of including expenses incurred by the dealers in promoting sales in the assessable value/transaction value of goods for the earlier period. Therefore, the petitioner argued for waiver of the entire duty amount before the appeal for the subsequent period was entertained. The High Court found that the impugned order of the Tribunal, by not waiving the pre-deposit as per Section 35F of the Central Excise Act, 1944, caused undue hardship to the petitioner. Consequently, the High Court allowed the petition, setting aside the order dated 26-7-2011, and directed the Tribunal to decide the appeal on merits without insisting on the pre-deposit of the demand raised against the petitioner.