1999 (5) TMI 228 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of penalty imposed under Rule 209A for Mahindra & Mahindra Ltd.
2. Waiver of pre-deposit of duty penalty for SRC Roll Forming Pvt. Ltd.
3. Short payment of duty by SRC Roll Forming Pvt. Ltd.
4. Application of extended period under Section 11A.
5. Financial hardship claim by SRC Roll Forming Pvt. Ltd.
6. Dispute over the value of raw material and other charges.
7. Contention regarding reimbursement of excise duty by Mahindra.

Analysis:
1. The appeal involved applications for waiver of penalty deposit by Mahindra & Mahindra Ltd. and SRC Roll Forming Pvt. Ltd. The latter, a job worker for Mahindra, faced a demand of Rs. 24.47 lacs due to the difference in the cost of material and other charges. The contention was made that the duty on raw material, taken as Modvat credit, should not be included in the cost. The extended period under Section 11A was disputed, citing financial hardship and loss incurred by SRC Roll Forming Pvt. Ltd.

2. The Departmental Representative argued that SRC Roll Forming Pvt. Ltd. suppressed facts regarding the actual value of goods, invoking the extended period for inquiry. The ambiguity in the Chartered Accountant's certificate and lack of disclosure were highlighted. The representative of Mahindra contended that duty reimbursement was part of the contract, emphasizing no intention to evade payment.

3. The Tribunal found a prima facie case for SRC Roll Forming Pvt. Ltd. on various elements except for the difference in raw material cost and drawing charges. The Tribunal noted the lack of details in determining the actual cost of raw material and the inclusion of octroi charges. However, no prima facie case was found for Mahindra, as the invoice did not reflect duty payment and the purchase order did not mention duty reimbursement.

4. Ultimately, the Tribunal directed SRC Roll Forming Pvt. Ltd. to deposit Rs. 2,00,000 within three months, waiving the remaining penalty and duty amounts. This decision was based on the significance of the certificate provided by Mahindra to SRC Roll, despite the duty being available as credit. The ruling highlighted the need for compliance by a specified date.

This comprehensive analysis covers the issues related to penalty waiver, duty pre-deposit, payment discrepancies, extended period application, financial hardship claim, and contractual obligations regarding excise duty reimbursement, as addressed in the legal judgment.