1997 (4) TMI 318 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery of duty.
2. Allegation of factory gate price being lower than depot sale-prices.
3. Acceptance of ex-factory price by adjudicating authority.
4. Addition of expenses of advertisements and notional interest accrued.
5. Demand on sales of Kitply of X-grade quality at higher price.
6. Financial hardship faced by the applicants.
7. Valuation of goods under Section 4 of Central Excise Act, 1944.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery of duty amounting to Rs. 8,13,40,448.00 for the period from February 1990 to June 1994. Additionally, a penalty of Rs. 1.00 crore imposed on the appellant company and Rs. 1.00 lakh on the Managing Director was also contested.

2. The adjudicating authority had initially demanded over Rs. 18.00 crore from the appellant company, alleging a significant difference between the factory gate price and depot sale-prices. However, this demand was dropped by the authority as it could not be substantiated with documentary evidence.

3. The adjudicating authority accepted the ex-factory price and applied it to all clearances from the factory, citing a previous judgment by the Apex Court in a similar case.

4. The appellant contended that the addition of expenses of advertisements and notional interest accrued on a deposit made by a purchaser were unwarranted, especially considering the acceptance of the factory gate price.

5. A portion of the demand was related to sales of Kitply of X-grade quality at a higher price from certain depots. The appellant argued that this aspect required further investigation and pointed out that they had already deposited a significant amount to cover this demand.

6. The appellant highlighted their financial hardship, emphasizing the closure of their factory due to a court order and the potential additional deposit causing further financial strain.

7. The respondent argued that additional consideration in the form of advertisement expenses and notional interest had been correctly added to the ex-factory sale price as per the Central Excise (Valuation) Rules.

8. After considering the submissions, the Tribunal agreed with the appellant's argument regarding the advertisement expenses and notional interest. They also noted that the remaining amount on account of sales of X-grade Kitply was relatively small, and since the appellant had already made a substantial deposit, no further pre-deposit was deemed necessary at that stage. Consequently, the Stay Petition was allowed unconditionally.