2014 (4) TMI 573 - AT - Central Excise

Waiver of predeposit of differential duty - valuation - clearance of clearing the semi-finished goods to their other unit - revenue contended that while arriving at 110% of the value in accordance with CAS-4, assessee hase failed to take into account the increase in administrative overheads from 12.58% to 15.98% during the period from 19.10.2007 to 31.3.2008. Hence the differential duty was demanded. - Penalty of equal amount along with interest - Held that - prima facie it appears that the applicants are liable to pay duty on the overhead charges and they had not disclosed to the Department - Conditional stay granted.

Summary

Issues Involved:
1. Delay in filing appeal
2. Stay application for waiver of predeposit of duty, penalty, and interest
3. Calculation of differential duty based on administrative overheads
4. Knowledge of actual overheads and revenue-neutrality argument
5. Application of extended period of limitation

Analysis:
1. Delay in filing appeal: The appellant sought condonation of a one-day delay in filing the appeal. The Tribunal, after considering the application, allowed the condonation of the delay, as the authorized representative of the appellant had no objection to the same.

2. Stay application for waiver of predeposit: The applicant, engaged in manufacturing chains and chain components, filed a stay application seeking waiver of predeposit of a substantial amount of duty, penalty, and interest. The demand arose due to the failure to account for the increase in administrative overheads during a specific period. The Tribunal directed the applicant to predeposit a sum of Rs.10,00,000 within six weeks. Upon such deposit, the predeposit of the balance amount of duty and penalty, along with interest, was waived, and recovery stayed pending the appeal's disposal.

3. Calculation of differential duty based on administrative overheads: The issue revolved around the differential duty demanded from the applicant concerning the administrative overhead charges. The Tribunal noted that prima facie, the applicants were liable to pay duty on the overhead charges that were not disclosed to the department. The matter of revenue-neutrality was deferred for consideration during the appeal hearing.

4. Knowledge of actual overheads and revenue-neutrality argument: The applicant contended that they paid duty based on an overhead percentage derived from the latest finalized balance sheet for the first six months of the financial year. They claimed ignorance regarding the actual overhead for the entire year. The argument of revenue-neutrality was raised, emphasizing that there was no suppression of facts and that extended limitation period should not apply.

5. Application of extended period of limitation: The authorized representative cited a Supreme Court judgment to support the contention that even in cases of revenue-neutrality, the demand of duty and penalty could be sustained. It was argued that the non-disclosure of administrative overheads warranted the application of the extended period of limitation. The Tribunal acknowledged the non-disclosure and directed the predeposit while staying the recovery pending the appeal's resolution.

This comprehensive analysis of the judgment addresses the various legal issues involved, including the delay in filing the appeal, the calculation of differential duty, the arguments regarding revenue-neutrality, and the application of the extended period of limitation.