2012 (12) TMI 549 - AT - Central Excise

Waiver of pre-deposit - manufacture of motor vehicles and motor vehicles parts alleged that certain quantity of motor vehicles which were cleared to the depots and were subsequently transferred to other depots and cleared on the higher value Held that - Applicant produced data regarding such goods and submitted that in majority of cases applicants have sold the goods at lower value on which the duty has been paid at the time of clearance from the factory - in view of the definition place of removal and in view of the provisions of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods Rules, 2000 - applicants have made out a strong case for total waiver of pre-deposit - Stay petitions allowed

Summary

Issues:
Application for waiver of pre-deposit of duty, interest, and penalties based on the contention of clearing goods at lower value than duty paid at clearance from the factory.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai involved the consideration of applications for waiver of pre-deposit of duty, interest, and penalties totaling Rs. 1,33,69,135/- and Rs. 20,580/-. The appellants, engaged in the manufacturing of motor vehicles and parts, cleared goods to Regional Sales Offices (RSO) at different depots. The dispute arose when certain motor vehicles were transferred to other depots and cleared at higher values than the initial clearance. The applicants argued that they cleared goods at lower values than the duty paid at the factory, resulting in excess duty payment. They relied on the Central Excise Act's Section 4 and Rule 7, defining the place of removal as the depot or premises where goods are sold post-clearance from the factory. The Revenue, however, cited Rule 7 of the Central Excise Valuation Rules, 2000, stating that goods were cleared at higher values from the depot, justifying the demands.

The Tribunal considered the submissions and evidence provided by the applicants, highlighting that the demands were based on goods cleared at values prevalent during depot clearance, not factory clearance. The applicants demonstrated that in most cases, goods were sold at lower values than the duty paid at factory clearance. Interpreting the definition of 'place of removal' and Rule 7 of the Valuation Rules, the Tribunal found a strong case for total waiver of pre-deposit. Consequently, the Tribunal allowed the stay petitions, waiving the pre-deposit of duties, interest, and penalties, with recovery stayed pending the appeal hearings.