2011 (9) TMI 864 - AT - Central Excise

Waiver of pre-deposit of duty - Duty on blank CDs alleged to have come into existence prior to their being recorded - Case of the Department is entirely based upon a report of the Chartered Engineer - Held that - The Department has interpreted the above report to mean that the blank CDs first come into existence and stamper data get transferred from stamper to disc under manufacture. However, the same Chartered Engineer has clearly stated further in his report that nowhere in the process blank CDs are produced/created in the manufacture of recorded audio, video CDs ROM with loaded software. The portion of the report relied upon by the Department is that the data gets transferred from the stamper to disc under manufacture. However prima facie the report cannot be read so as to mean that first blank CDs come into existence on which CDs recording subsequently emerges. We, therefore, find that the assessee has made out a strong prima facie case for unconditional waiver and accordingly, dispense with the pre-deposit of the amount in dispute (duty, interest and penalties) and stay recovery thereof during pendency of the appeals - Stay granted.

Summary

Issues: Application for waiver of pre-deposit of duty, interest, and penalties on blank CDs alleged to have come into existence prior to recording.

Analysis:
1. Interpretation of Chartered Engineer's Report:
The Department's case was primarily based on a report by a Chartered Engineer, Shri Vinay Kumar Wadhawan. The report detailed the process of CD production, emphasizing the transfer of data from the stamper to the disc during manufacture. The Department interpreted this report to suggest that blank CDs first come into existence before data transfer. However, the Engineer clarified that blank CDs are not created in the process of manufacturing recorded CDs with loaded software. The Tribunal noted that the report does not support the Department's interpretation that blank CDs are initially produced before recording, strengthening the appellant's case.

2. Prima Facie Case for Waiver:
Based on the analysis of the Chartered Engineer's report, the Tribunal found that the appellant had presented a strong prima facie case for unconditional waiver of the pre-deposit amount concerning duty, interest, and penalties on the blank CDs in dispute. The Tribunal concluded that the report did not indicate the creation of blank CDs before recording, supporting the appellant's argument against the Department's interpretation. Consequently, the Tribunal decided to dispense with the pre-deposit amount and stay the recovery during the pendency of the appeals.

Overall, the Tribunal's decision was influenced by the interpretation of the Chartered Engineer's report, which clarified the CD manufacturing process and refuted the Department's assertion regarding the creation of blank CDs before recording. This clarification led to the Tribunal granting the waiver of the pre-deposit amount, providing relief to the appellant during the appeal process.