2013 (12) TMI 219 - AT - Central Excise

Inclusion of transportation cost Rails brought to the factory Value incurred to be included in finished goods or not - Waiver of pre-deposit Held that - Once the value of rails are not to be included in the value of the finished goods i.e. railway or tram way track material, manufactured out of such rails, the transportation cost for bringing the rails from Stockyard/Railway siding to the factory of applicants, cannot to be included in the value of finished goods - the applicants are able to make out a prima facie case for total waiver of amount Pre-deposits waived till the disposal Stay granted.

Summary

Issues:
Application for waiver of pre-deposit of duty and penalties under Section 11AC and Rule 25 of Central Excise Rules, 2002.

Analysis:
The case involved an application for waiver of pre-deposit of duty and penalties amounting to Rs.7,86,837/- and Rs.5.00 Lakhs respectively, imposed under Section 11AC and Rule 25 of Central Excise Rules, 2002. The appellant, engaged in manufacturing 'Railway or Tramway Track materials' from raw material supplied by Indian Railways, contested the department's decision to levy duty on transportation costs for bringing the rails to their factory from March 2003 to March 2007. The appellant relied on Notification No. 06/02-CE dated 6/9/2002 and 6/2006 CE dated 01.03.2006, which stated that the value of the rails should not be included in the value of finished goods. The appellant argued that if the value of rails is excluded from the total value of finished goods, then the transportation cost for bringing the rails to the factory should not be included in the value of 'railway track materials' for duty calculation.

The Revenue, represented by the Ld. A.R., supported the findings of the Ld. Commr. (Appeal) regarding the duty imposition. After hearing both sides and examining the records, the Tribunal found that the appellant indeed manufactured 'Railway & Tramway track materials of Iron & steel products' using rails supplied by Indian Railways. It was undisputed that the value of rails should not be included in the value of finished goods as per the relevant notifications. The Tribunal held that since the value of rails is not to be included in the value of finished goods, the transportation cost for bringing the rails to the factory cannot be part of the duty calculation for 'railway track materials.' Consequently, the Tribunal concluded that the appellant had made a prima facie case for a total waiver of pre-deposit of dues. Therefore, the Tribunal granted the waiver of pre-deposit of dues and stayed the recovery during the pendency of the appeal. The order was pronounced in the open court by Dr. D.M. Misra.