1995 (1) TMI 216 - AT - Central Excise

Summary

Issues:
Dispensation of pre-deposit of duty and penalty based on impugned order of the Collector of Central Excise, Bangalore.

Analysis:
The applicants sought dispensation of pre-deposit of duty amounting to Rs. 4,03,603.42 and a penalty of Rs. 50,000 levied by the Collector of Central Excise, Bangalore. The duty was demanded due to the inclusion of amounts received for tooling and product development from customers in the assessable value. The applicants argued that the amount received had been amortized by adding a portion of these charges on each piece supplied after development. The lower authority confirmed the duty demand but rejected the plea for further amortization. The Tribunal noted that the lower authority accepted the principle of amortization for supplies made against orders with advance taken for tooling charges. The appellants contended that the loading should only be done to the extent of the amount amortized per piece for the supplies made so far. The Tribunal found the appellants' plea acceptable, as there was no evidence linking the amount received to specific clearances. The duty demandable was determined to be only Rs. 4,731. Therefore, the Tribunal ordered a pre-deposit of Rs. 10,000 to dispense with the balance of duty and the penalty, with recovery stayed pending appeal.

The learned Counsel for the applicants argued that the development charges collected were relatable to the manufactured and cleared goods, emphasizing the need to allocate these charges towards the cost of the product. The Tribunal referenced a previous case involving the same applicants, where it was held that the petitioner had a good case on merits for dispensation of pre-deposit. The Tribunal highlighted that the lower authority did not consider the aspect of manufacture and clearance of goods by the applicants, indicating a favorable stance towards the applicants' plea. The Tribunal emphasized the need for a clear link between the amount received and the specific clearances for duty assessment purposes, ultimately determining the demandable duty to be significantly lower than initially claimed.

The Respondent's representative argued that the applicants should be liable to pay duty since they had received the amount in question. The Tribunal acknowledged the need for duty payment but emphasized the importance of correctly amortizing the amount received for tooling and other charges over the number of pieces to be supplied against the order. The Tribunal criticized the lower authority for not following the principle of amortization while demanding duty and supported the appellants' contention that loading should only be done for the supplies made so far. The Tribunal found the appellants' plea prima facie acceptable, as there was no evidence provided by the Revenue to contradict it. The Tribunal's decision to order a pre-deposit and dispense with the balance of duty and penalty was based on the lack of specific link between the amount received and the clearances made, leading to a reduced duty amount of Rs. 4,731.