1997 (5) TMI 212 - AT - Central Excise

Summary

Issues:
1. Disputed demand of duty.
2. Incorrect accounting for spares.
3. Arbitrary valuation of goods.
4. Waiver of deposit of duty and penalty.

Analysis:
1. The appellant contested a duty demand of approximately Rs. 54.49 lacs, with only Rs. 45,000 being undisputed and Rs. 1.00 lac already paid. Additionally, a penalty of Rs. 50.00 lacs was imposed under Rule 173Q. The appellant argued that the demand arose due to the erroneous accounting of spares like washers, bolts, nuts, gaskets, which were mistakenly entered in the RG1 register along with manufactured goods and cleared with duty payment. The appellant stopped this practice in 1988 upon realizing the error but continued to show the stock without updating subsequent purchases or clearances. The Commissioner allegedly did not consider these facts and denied cross-examination of the jurisdictional Superintendent from 1988.

2. The appellant claimed that the Commissioner arbitrarily determined the value and duty payable on the goods by basing it on manufactured goods or alternatively suggested a total value divided by the number of units. The appellant argued financial hardship was not pleaded and highlighted discrepancies in the valuation method. The Tribunal noted that the RG1 register lacked separate sections for various spares and manufactured goods, relying only on internal records like issue slips. The Tribunal found it plausible that the appellant purchased some goods externally, but this did not disprove manufacturing. The issue of machinery and equipment for manufacturing was not raised before the Commissioner and would be addressed at the final hearing.

3. The Tribunal acknowledged the appellant's argument regarding the arbitrary valuation method used by the Commissioner. While the suggested method by the appellant favored them, the Tribunal could not adopt it solely based on this bias. Citing the Calcutta High Court judgment in Tapan Kumar Biswas v. Union of India 1996 (63) ECR 546 (Cal), which went against the appellant, the Tribunal emphasized the need for a fair and unbiased valuation approach. Considering all factors, the Tribunal decided to waive the pre-deposit of the balance of duty and penalty if the appellant deposited Rs. 25.00 lacs within three months.

4. The Tribunal directed compliance by 1-9-1997, indicating a deadline for the appellant to fulfill the deposit requirement to avail the waiver. The judgment balanced the appellant's contentions with the legal principles and precedents cited, ultimately providing a path for resolution while ensuring fairness in the process.