2012 (5) TMI 34 - AT - Central Excise

Application for stay - Waiver of pre-deposit - Time limitation - It was found that the applicants manufactured the goods as per the drawings and designs supplied by their customers free of cost and the applicants have not included the money value of drawings and designs supplied by their customers free of cost in the assessable value of the goods cleared by them to their customers - Held that in the case of International Auto Ltd. Vs. Commissioner of Central Excise, Bihar reported in (2005 (3) TMI 132 - SUPREME COURT OF INDIA), the Hon ble Apex Court has held that the assessee is not liable to pay duty on the inputs supplied by the final product manufacture, since it had not taken credit for Modvat in respect of inputs - the issue is debatable and the applicants have paid the duty demand along with interest for the normal period of limitation and the same is sufficient for compliance of the provisions of Section 35F.

Issues:
Waiver of pre-deposit of demands confirmed against applicants.

Analysis:
The applicants sought waiver of pre-deposit of demands confirmed against them. The demands were related to the assessable value of goods cleared by the applicants to their customers. The issue in question was whether the cost of drawings and designs supplied free of cost by the principal manufacturer, who had discharged duty liability on the final products, should be included in the assessable value by the applicants. The applicants argued that they were under a bona fide belief that the drawings and designs supplied free of cost were not includable in the assessable value, citing legal precedents to support their contention. However, the Revenue argued that as per the Valuation Rules, 2000, the value of drawings and designs should be included in the assessable value. The Revenue contended that the extended period was rightly invoked, emphasizing that the principal manufacturer paying duty on the final product did not exempt the applicants from including the cost of designs and drawings in the assessable value.

The Tribunal noted that the applicants had not included the cost of designs and drawings charges in the assessable value, which were supplied free of cost by the principal manufacturer. Referring to a previous case involving a similar scenario, the Tribunal found that if the appellants had paid duty on the full value of the goods inclusive of the raw materials cost, the principal manufacturer could have taken credit on the duty paid. The Tribunal observed that the issue was debatable, considering the legal precedents and the fact that the applicants had already paid the duty demand along with interest for the normal period of limitation. Therefore, the Tribunal waived the requirement of pre-deposit of the balance amount of duty, interest, and penalty, staying the demand during the pendency of the appeal.

In conclusion, the Tribunal granted the waiver of pre-deposit of the demands confirmed against the applicants, considering the debatable nature of the issue regarding the inclusion of the cost of drawings and designs in the assessable value. The Tribunal emphasized that the applicants had already complied with the provisions of the Central Excise Act by paying the duty demand along with interest for the normal period of limitation.

← Previous Next →