2012 (10) TMI 865 - AT - Central Excise

Waiver of duty demanded - applicant manufactured paper and paper products - applicant clears the paper in reel form and send the said paper in reel form to job workers for conversion into sheets and the converted sheets are sent directly from the job worker s premises to the customers - applicant raises bills without the reel discount and the said amount is treated as conversion charges - department has included the said amount referred to as reel discount in the assessable value and demanded the differential duty Held that - Goods cleared to the job workers are in reel form. The duty requires to be paid at the time of clearance in the form in which the goods are removed - substantial supplies are being effected in reel form at the same price, and, therefore, the enhancement of assessable value is not, prima facie, sustainable in respect of the paper in reel form cleared for conversion - pre-deposit waived

Summary

Issues: Waiver of duty demanded, inclusion of conversion charges in assessable value, assessment of goods in the form of removal, pre-deposit of dues, sustainable enhancement of assessable value.

Analysis:
1. Waiver of duty demanded: The appellant sought waiver of duty demanded amounting to Rs. 13,47,812/- for the period April 2008 to November 2008 and Rs. 4,12,227/- for the period December 2008 to March 2009, along with interest and penalties. The dispute arose from the treatment of conversion charges collected for paper in sheet form. The Tribunal considered the nature of clearances and the form in which goods were supplied to determine the duty liability.

2. Inclusion of conversion charges in assessable value: The appellant cleared paper in reel form to job workers for conversion into sheet form before supply to customers. The department included the conversion charges in the assessable value, leading to the demand for differential duty. The appellant argued that conversion charges need not be included, relying on legal precedents to support their position.

3. Assessment of goods in the form of removal: The Tribunal examined the assessment of goods based on the form in which they were removed. It noted that duty should be paid at the time of clearance in the form in which the goods are removed. The Tribunal emphasized the importance of assessing goods in the form in which they were supplied to determine the duty liability accurately.

4. Pre-deposit of dues: The Commissioner's order required pre-deposit of dues, which the appellant contested. The Tribunal, after considering the submissions and records, found that the appellant had a valid case for full waiver of the dues. Consequently, the Tribunal waived the pre-deposit of dues and stayed the recovery pending the disposal of the appeals.

5. Sustainable enhancement of assessable value: The Tribunal analyzed the sustainability of enhancing the assessable value for paper cleared in reel form for conversion. It observed that substantial supplies were made in reel form at the same price, making the enhancement of assessable value not prima facie sustainable. This assessment influenced the decision to grant a waiver of the dues to the appellant.

In conclusion, the Tribunal granted the appellant's request for a waiver of duty demanded, considering the form of clearances, treatment of conversion charges, assessment principles, and sustainability of enhancing assessable value. The decision highlighted the importance of assessing goods accurately based on their form of removal and ensuring fairness in duty liabilities.