1997 (1) TMI 243 - AT - Central Excise

Issues Involved:
1. Dispensation of pre-deposit of duty and penalty.
2. Eligibility for the benefit of Notification No. 217/86.
3. Inclusion of wrapping paper weight in assessable value.
4. Limitation period for raising the demand.
5. Financial hardship claim.

Detailed Analysis:

1. Dispensation of Pre-deposit of Duty and Penalty:
The appellants filed an application under Section 35 of the Central Excise Act, 1944, seeking dispensation of pre-deposit of a duty amount of Rs. 1,04,80,495/- and a penalty of Rs. 1,05,00,000/- as per the impugned order. The Tribunal directed the appellants to pre-deposit the entire duty demanded and Rs. 10,00,000/- towards the penalty by 27th February 1997, with compliance reporting on 28th February 1997. The pre-deposit of the balance penalty was dispensed with pending appeal.

2. Eligibility for the Benefit of Notification No. 217/86:
The appellants claimed the benefit of Notification No. 217/86 for wrapping paper used for captive consumption. The lower authority denied this benefit, stating that the appellants did not include the value of the wrapping paper in the assessable value of the final product, thus not fulfilling the notification's requirements. The Tribunal observed that the appellants did not take the weight of the wrapping paper into account when arriving at the notional weight of the paper, which was a condition under Notification 217/86. The Tribunal found the lower authority's findings sustainable in law.

3. Inclusion of Wrapping Paper Weight in Assessable Value:
The appellants argued that the weight of the wrapping paper was included in the gross weight marked on the packages. However, the lower authority found that the appellants did not include the weight of the wrapping paper in the assessable value of the paper. The Tribunal noted that the appellants did not provide documentary evidence to support their claim. The Tribunal upheld the lower authority's decision, stating that the weight of the wrapping paper was not included in the assessable value, thus disqualifying the appellants from the benefit of Notification 217/86.

4. Limitation Period for Raising the Demand:
The appellants contended that the longer limitation period could not be invoked as they had filed price lists and classification lists, which were approved by the authorities. The Tribunal observed that the appellants did not declare the method for arriving at the notional weight in the price or classification lists. The Tribunal held that the appellants had prima facie withheld information from the Department, justifying the invocation of the longer limitation period.

5. Financial Hardship Claim:
The appellants did not specifically plead financial hardship. The Tribunal noted this absence and directed the appellants to pre-deposit the entire duty demanded and a portion of the penalty.

Conclusion:
The Tribunal found no infirmity in the lower authority's order and directed the appellants to comply with the pre-deposit requirements. The Tribunal emphasized that the appellants did not satisfy the conditions of Notification 217/86, particularly regarding the inclusion of wrapping paper weight in the assessable value, and upheld the demand and penalty imposed by the lower authority.

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