2005 (3) TMI 185 - AT - Central Excise

Summary

Issues: Duty demand on manufacturers for not including certain expenses in assessable value; Appeal for waiver of pre-deposit of duty and penalty.

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue involved was the duty demand on manufacturers of Sprinkler and Drip Irrigation Systems for not including administrative, selling, and distribution expenses in the assessable value of the intermediate product captively consumed for the manufacture of exempted irrigation equipment. The Tribunal considered arguments such as the demand being barred by limitation, the inclusion of administrative overheads, selling and distribution expenses, and the classification of items under Chapter 84 for exemption from duty. The Tribunal referred to a previous case, Elgi Ultra Appliances Ltd. v. CCE, Coimbatore, where components of Drip Irrigation System were classified under Chapter Heading 84.24 and leviable to Nil rate of duty. The Tribunal upheld the decision of the Supreme Court in the mentioned case, which dismissed the appeal of the Revenue against the Tribunal's order. In the present case, the Tribunal found that the items in question were not liable to duty as they were captively consumed for the manufacture of exempted irrigation equipment, following the ratio of the previous case. Consequently, the Tribunal set aside the impugned order, ruling that the duty demand and penalty were unsustainable, and allowed the appeal.

The Tribunal also addressed the application for waiver of pre-deposit of duty and penalty. After hearing both sides, the Tribunal decided to proceed with the appeal itself for a decision and waived the pre-deposit requirement of Rs. 53,83,848/- and an equal amount of penalty imposed upon the applicant. This decision was made after considering the arguments presented and the findings related to the duty demand issue. The Tribunal's ruling on the duty demand and penalty influenced the decision to waive the pre-deposit requirement, ultimately allowing the appeal to proceed without the need for the initial deposit.