2012 (3) TMI 351 - AT - Central Excise

Waiver of pre deposit - Valuation of the ambulances - Classification - Duty under Heading 87.02 of the Central Excise Tariff or under Heading 87.03 - Held that - in the matter of valuation the principle involved is decided against the applicants by the Tribunal though the matter is under challenge before the Apex Court. So there is a case for calling for pre-deposit on this issue. In the matter of classification we are prima facie in agreement with the applicants that the Tariff Item in Heading 87.03 can be read only as a split of the goods covered by the goods covered by the description in the heading and the Tariff Item cannot expand the scope of the heading. So we are of the view that there is no case for asking for any pre-deposit of duty demand arising from this issue - Conditional stay granted.

Summary

Issues: Stay applications in two appeals involving duty demand and penalty; Dispute on valuation basis for ambulances; Dispute on classification under Central Excise Tariff.

In this judgment, two stay applications in two appeals are being considered by the Appellate Tribunal CESTAT NEW DELHI, involving duty demand and penalty against two separate applicants. The first applicant, M/s. Sita Singh & Sons (P) Ltd., was involved in manufacturing chassis for ambulances, while the second applicant, M/s. SML Isuzu Ltd., faced a penalty of Rs. three crores. The duty demand for the first applicant amounted to Rs. 7,54,40,318/-, with a penalty of an equal amount, out of which a partial deposit had already been made. The first dispute revolved around the valuation of ambulances based on cost construction or sale price to independent buyers by the second applicant. The second issue pertained to the classification of goods under different headings of the Central Excise Tariff.

Regarding the valuation dispute, the Counsel for the applicants acknowledged a decision of the Larger Bench of the Tribunal against them, but highlighted ongoing contestation of the issue before the Supreme Court. The matter was to be argued further during the final appeal hearing. On the classification issue, the Revenue argued for classification under Heading 87.03 based on a specific entry introduced after 2005, covering specialized transport vehicles like ambulances. The applicants contended that vehicles designed for transporting more than six persons should fall under Heading 87.02, emphasizing that the eight-digit entry cannot expand the scope of the heading.

After considering arguments from both sides, the Tribunal found that the valuation principle was decided against the applicants by the Tribunal, warranting a pre-deposit. However, in the matter of classification, the Tribunal prima facie agreed with the applicants that the Tariff Item in Heading 87.03 should be read as a split of goods covered by the description in the heading, without expanding its scope. Consequently, the Tribunal directed the first applicant to make a pre-deposit of Rs. one crore within a specified timeframe, with a waiver of the balance of dues and penalty for the second applicant, subject to the pre-deposit compliance.

Overall, the Tribunal's judgment addressed the stay applications, valuation disputes, and classification issues comprehensively, providing specific directives for pre-deposit and compliance, based on the arguments presented and legal interpretations of the Central Excise Tariff.