2014 (6) TMI 585 - AT - Central Excise

Waiver of pre deposit - Penalty u/s 11AC - Whether the goods are liable to be assessed under Section 4 or 4A of the Central Excise Rules, 1944, a debatable issue - Held that - Applicants had submitted that the differential duty applying the value under Section 4 of Central Excise Act, 1944, has been worked out to Rs.52.72 lakhs and the computation of demand by the ld.Adjudicating Authority has been disputed. At this stage, we find that the offer made by the ld.Advocate for the Applicant, seems to be reasonable - Conditional stay granted.

Summary

Issues:
1. Waiver of predeposit of duty and penalty under Section 11AC of the Central Excise Act, 1944.
2. Assessment of goods under Section 4 or 4A of the Central Excise Act, 1944.

Analysis:
1. The appellant, engaged in manufacturing powder hair dye, sought waiver of predeposit of duty amounting to Rs.3.28 Crores and an equal penalty under Section 11AC of the Central Excise Act, 1944. The goods were packed in sachets of 3 gms each, with an MRP of Rs.11, and declared as part of a multi-piece pack. The appellant contended that they complied with Legal Metrology Rules, 2011, and cleared the goods in cartons containing six or more sachets. The carton indicated an MRP of Rs.66/Rs.68 for the 6/8 sachet packet. The appellant argued that duty was being paid based on the carton MRP under Section 4A. The dispute arose as the authorities claimed the goods should be assessed under Section 4 since each sachet weighed less than 10 gms, exempting them from MRP affixation. The appellant disputed the demand, offering to deposit Rs.25.00 lakhs while contesting the calculation of duty amounting to Rs.52.72 lakhs.

2. The department argued that since each sachet bore an MRP and contained less than 10 gms, the goods should be assessed under Section 4. The Tribunal acknowledged the debatable issue of whether the goods should be assessed under Section 4 or 4A. Considering the appellant's offer reasonable, the Tribunal directed them to deposit Rs.25.00 lakhs within four weeks, with the balance dues waived and recovery stayed during the appeal's pendency. The judgment highlighted the contentious valuation method and the reasonable deposit offer made by the appellant, leading to the decision for partial waiver and stay on recovery pending appeal.

Conclusion:
The judgment addressed the waiver of predeposit of duty and penalty under Section 11AC and resolved the assessment issue under Section 4 or 4A of the Central Excise Act, 1944. It emphasized the valuation discrepancies and the appellant's reasonable deposit offer, leading to the directive for partial waiver and stay on recovery during the appeal process.