1994 (12) TMI 206 - AT - Central Excise

Issues Involved:
1. Waiver of pre-deposit of duty and penalty.
2. Classification and assessable value of "cable gland" in relation to Flame Proof Lighting Equipment (FPLE).
3. Applicability of the extended period of limitation under Section 11A of the Central Excises and Salt Act, 1944.
4. Financial hardship faced by the petitioner.

Detailed Analysis:

1. Waiver of Pre-Deposit of Duty and Penalty:
The petitioner sought a waiver of pre-deposit of a duty amounting to Rs. 14,89,735 and a penalty of Rs. 15,000/- imposed by the Collector of Central Excise, Madras. The Tribunal considered the financial condition of the petitioner, which reported a gross profit of Rs. 7.71 lakhs and a net profit of Rs. 71,000/- for the year ending 31-3-1994, with significant outstanding dues from sundry debtors. Consequently, the Tribunal directed the petitioner to make a pre-deposit of Rs. 5.00 lakhs by 31-1-1995, with the balance duty and penalty being stayed pending appeal, subject to compliance.

2. Classification and Assessable Value of "Cable Gland":
The central issue was whether the "cable gland" supplied by the petitioner was a component part of FPLE and whether its value should be included in the assessable value of FPLE. The petitioner argued that the cable gland was an accessory, not a component part, and was optional for buyers. The Tribunal noted that the adjudicating authority had determined that the cable gland was indispensable for ensuring the flame-proof quality of FPLE, making it an integral part of the equipment. The Tribunal found no prima facie infirmity in the lower authority's reasoning that the value of the cable gland should be included in the assessable value of FPLE whenever cleared together, even if invoiced separately.

3. Applicability of the Extended Period of Limitation:
The petitioner contested the invocation of the extended period of limitation, arguing that the classification list had been approved since 1988-89 and RT 12 assessments had been made. The adjudicating authority found that the petitioner had not declared the cable gland in the classification list for the relevant periods (1989-90, 1990-91) and had cleared the same without payment of duty, issuing separate invoices for cable glands and electrical fittings. The Tribunal noted that the issue of limitation required deeper examination, which was not possible at the interlocutory stage, and upheld the lower authority's reasoning.

4. Financial Hardship Faced by the Petitioner:
The petitioner claimed financial hardship and liquidity problems, with significant amounts due from sundry debtors and a turnover of over Rs. 3.6 crores. The Tribunal took into account the financial position of the petitioner, including the gross profit, net profit, and outstanding dues, while deciding on the pre-deposit amount. The Tribunal directed a pre-deposit of Rs. 5.00 lakhs, considering the duty payable on clearances of FPLE with cable glands, estimated at Rs. 5,15,831.

Conclusion:
The Tribunal directed the petitioner to make a pre-deposit of Rs. 5.00 lakhs by 31-1-1995, staying the recovery of the balance duty and penalty pending appeal, subject to compliance. The Tribunal found no prima facie infirmity in the lower authority's reasoning regarding the inclusion of the cable gland's value in the assessable value of FPLE and upheld the invocation of the extended period of limitation, noting that deeper examination was required.

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