1994 (4) TMI 156 - AT - Central Excise

Issues Involved:
1. Imposition of penalty without mention in the show cause notice.
2. Inclusion of optional accessories in the assessable value for duty calculation.
3. Contradictory treatment of optional accessories for export and home consumption.
4. Financial hardship due to the pre-deposit requirement.

Issue-wise Detailed Analysis:

1. Imposition of Penalty Without Mention in the Show Cause Notice:
The appellant argued that the imposition of a penalty of Rs. 10 lakhs is "ab initio illegal" as there is no mention in the show cause notice regarding the leviability of the penalty. Penalty proceedings are quasi-criminal, and without explicit mention in the show cause notice, the penalty cannot be imposed. The respondent acknowledged that Section 11A was mentioned in the show cause notice but conceded that there was no mention of the penalty. The court referenced the Supreme Court's judgment in "C.I.T. v. Anwar Ali," emphasizing that penalty proceedings are penal in nature and the burden of proof lies with the department.

2. Inclusion of Optional Accessories in the Assessable Value for Duty Calculation:
The appellant contested the inclusion of the value of optional accessories (such as crevice nozzle, multipurpose dusting brush, paper bag, radiator brush, spray jar) in the assessable value of the vacuum cleaner. They argued that these accessories are not essential for the vacuum cleaner's operation and cited several judgments to support their claim. The respondent countered that the appellant included the value of these accessories in the export value but excluded them for home consumption, presenting a double standard. The court noted the contradictory nature of the appellant's pamphlets, which described the accessories as both components and optional accessories.

3. Contradictory Treatment of Optional Accessories for Export and Home Consumption:
The respondent highlighted that the appellant included the value of optional accessories in the export value but excluded them for home consumption. This inconsistency was emphasized by pointing to the appellant's own documentation, which showed different treatments of the same items. The court acknowledged this contradiction and noted that further observations would not be proper as the matter was sub judice.

4. Financial Hardship Due to the Pre-deposit Requirement:
The appellant did not plead financial hardship but offered to furnish a bank guarantee if the stay was not granted. The court considered the undue hardship that would result from requiring the appellant to deposit the total duty amount of Rs. 7,31,700/- and the penalty of Rs. 10 lakhs. The court referenced the Supreme Court's judgment in "Asstt. Collector of Central Excise, West Bengal v. Dunlop India Ltd. & Others" and decided to dispense with the pre-deposit of the entire amount. Instead, the court ordered the appellant to deposit Rs. 4 lakhs in cash within 10 weeks, with compliance to be reported within 12 weeks. Failure to comply would result in the automatic vacation of the stay order.

Conclusion:
The court recognized the prima facie merits of the appellant's case regarding the inclusion of optional accessories in the assessable value and the imposition of a penalty without mention in the show cause notice. The court also took into account the undue hardship that would result from the pre-deposit requirement and provided a conditional stay, requiring the appellant to deposit a reduced amount. The matter was listed for mention on 1st August 1994.

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