2014 (12) TMI 447 - AT - Central Excise

Waiver of pre deposit - company has become a sick company and has been referred to BIFR - Whether the appellant is eligible for deducting the secondary packing charges of about 20 paise per kg of yarn - Held that - Appellant has been referred to BIFR, if we grant stay, even the BIFR will not take that amount into consideration while deciding the matter before them. Therefore in undeserving cases and in the case of a liability which has already crystallized and in the case where an assessee does not have a prima facie case at all, it may not be appropriate to grant stay on the ground that the matter is before BIFR. In any case assets cannot be disposed of by the Revenue also and they also have to go before BIFR (as per our understanding), no harm or damage would be caused or no undue hardship would be caused to the appellant if we do not grant stay. appellant is directed to deposit the duty amount in its entirety within eight weeks - stay denied.

Summary

Issues:
- Eligibility for deducting secondary packing charges from assessable value for central excise duty computation.

Analysis:
1. The appellant, engaged in yarn manufacturing, claimed discounts from the assessable value for central excise duty computation. The dispute revolves around the eligibility to deduct secondary packing charges of 20 paise per kg of yarn. The demand initially exceeding Rs. 1.25 crores reduced to Rs. 7,11,356 for the period from October 1995 to June 2000.

2. The appellant's counsel argued that the company is financially distressed, referred to BIFR, and requested a waiver of the pre-deposit requirement. However, the core issue was the inclusion of secondary packing costs in the assessable value. The Commissioner (Appeals) had ruled that 20 paise per kg of secondary packing cost is includible. The appellant disputed the quantification aspect, claiming no duty payment was necessary, but the records showed a reduced demand to Rs. 7,11,356 from Rs. 44,73,312 after adjustments.

3. The Tribunal found no merit in the quantification arguments, emphasizing that the dispute focused on the admissibility of claimed discounts at the time of removal. Granting a stay due to BIFR referral was deemed inappropriate when the liability had crystallized, and the appellant lacked a prima facie case. The Tribunal directed the appellant to deposit the duty amount within eight weeks, emphasizing that not granting a stay would not cause undue hardship.

This judgment clarifies the specific issue of deducting secondary packing charges for central excise duty computation, highlighting the importance of adherence to legal procedures and the consideration of financial distress in tax disputes.