2014 (10) TMI 18 - AT - Central Excise

Waiver of pre deposit - Determination of assessable value - Interest u/s 11AA - Penalty u/s 11AC - Held that - In the appellant s own case, the co-ordinate Bench at Ahmedabad Bench has taken a view that the transaction would not come under the provisions of Rule 10A of the Central Excise Valuation Rules, 2000. Therefore, the appellants have made out a prima facie case for grant of unconditional stay. Accordingly, we grant waiver from pre-deposit of dues adjudged against the appellant and stay recovery thereof during the pendency of the appeals. Since the duty demand confirmed against the main appellant is stayed, the co-appellants would also get the same relief. - Decided in favour of assessee.

Summary

Issues:
Appeal against Order-in-Original confirming duty demand, interest, and penalties under Central Excise Act, 1944.

Analysis:
The judgment involves an appeal against an Order-in-Original confirming a duty demand, interest, and penalties under the Central Excise Act, 1944. The appellant, a manufacturer of lubricating preparations, contests the duty demand of &8377; 9,07,83,384 imposed by the adjudicating authority. The main issue revolves around the determination of assessable value under Rule 10A of the Central Excise Rules, 2000, concerning the transactions between the appellant and brand owners. The appellant argues that they operate on a principal-to-principal basis, procuring raw materials from specified vendors without direct supply from the brand owners. The appellant asserts that they do not qualify as job workers under Rule 10A, as no inputs/goods are supplied by the principal manufacturer or authorized persons. The appellant cites precedents and tribunal decisions to support their position, emphasizing that the duty demand enhancement based on the sale price of brand owners is legally unsustainable.

The appellant's counsel highlights a previous tribunal decision concerning a similar matter related to the appellant's unit in Daman, where the duty demand was set aside. Additionally, the counsel references a tribunal ruling in CE, Hyderabad Vs. M/s Innocorp Ltd. & Other, emphasizing that purchasing inputs from vendors chosen by brand owners does not establish authorization by the brand owner. The appellant seeks a stay based on these arguments and precedents.

The co-appellant, on whom penalties were imposed, argues that since there was no proposal in the show cause notice to confiscate goods, the penalties under Rule 26 of the Central Excise Rule, 2002 are legally unsustainable. The Revenue, represented by the ld. Commissioner (A.R.), contends that the transaction between the appellant and brand owners falls under Rule 10A due to the agreement requiring the appellant to purchase raw materials from specified vendors with prices negotiated by brand owners. The Revenue asserts that the nature of the transaction is one of job work, with the appellant receiving processing charges plus profit. The Revenue relies on tribunal decisions and a High Court ruling to support their stance, urging the tribunal to uphold the duty demand and penalties.

After considering both parties' submissions, the tribunal notes that a co-ordinate Bench at Ahmedabad had previously ruled that the transaction does not fall under Rule 10A of the Central Excise Valuation Rules, 2000. Consequently, the tribunal finds that the appellants have established a prima facie case for an unconditional stay. Accordingly, the tribunal grants a waiver from pre-deposit of dues adjudged against the appellant and stays the recovery during the appeal's pendency. As the duty demand against the main appellant is stayed, the co-appellants also receive the same relief. The stay petitions are thus disposed of in favor of the appellants.