2014 (9) TMI 709 - AT - Central Excise

Waiver of pre-deposit of duty - Valuation - inclusion of cost of such design work, free issue materials, as well as the establishment cost of the foreign representative rendering the services at the manufacturer s site in the assessable value - Held that - because of supply of drawing and design, and free issue materials along with other services, the assessable value cannot be determined under Section 4(1)(a) of the Central Excise Act, 1944. The assessable value was determined under Section 4(1)(b) read with Rule 6 of the Central Excise Valuation Rules, 2000. Prima facie, we do not find any infirmity in the Order of the ld. Adjudicating Authority, in computing the assessable value by including the free issue materials, drawing/design charges and other services and in confirming the duty on the differential value. Thus, the Applicant failed to make out a prima facie case for total waiver of pre-deposit of the dues adjudged. Consequently, we direct the Applicant to deposit 50% of the duty involved within a period of eight weeks from today and on deposit of the said amount, the balance dues adjudged would stand waived and its recovery stayed during the pendency of the Appeal - Partial stay granted.

Summary

Issues: Application for waiver of pre-deposit of duty and penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. The Applicant supplied traction motors to clients with design work and free issue materials. The Commissioner included these costs in the assessable value under Section 4(1)(b) of the Central Excise Act, 1944. The Applicant argued that once the transaction value is available, these costs should not be included. However, they failed to prove financial hardship with relevant documents.

2. The Revenue supported the Commissioner's findings regarding the assessable value determination.

3. The Tribunal found that due to the supply of design work, free issue materials, and other services, the assessable value could not be determined under Section 4(1)(a) but under Section 4(1)(b) read with Rule 6 of the Central Excise Valuation Rules, 2000. The Tribunal upheld the Adjudicating Authority's order in computing the assessable value, including the additional costs, and confirming the duty on the differential value. As the Applicant did not establish a prima facie case for total waiver, they were directed to deposit 50% of the duty within eight weeks, with the balance dues waived upon such deposit and recovery stayed during the appeal. Non-compliance would lead to dismissal of the appeal without further notice.

This judgment highlights the importance of correctly determining assessable value under the Central Excise Act, 1944 and the necessity of providing sufficient evidence to support claims of financial hardship when seeking waiver of pre-deposit. The Tribunal's decision underscores the need for parties to adhere to procedural requirements and substantiate their arguments with relevant documentation in legal proceedings before the appellate authorities.