1998 (7) TMI 389 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalty under Section 35F of the Act.

Analysis:
The appellant, engaged in the manufacture of cosmetic goods, filed appeals against the original order confirming a demand of duty, penalty, and confiscation of plant and machinery. The Commissioner considered various agreements between the appellant, Modi Revlon (P) Ltd., and M/s. Revlon Mauritious, finding undisclosed facts leading to differential duty demand and penalties for the period from August 1995 to June 1997. The Commissioner examined agreements, royalty payments, advances, and premises details to determine the assessable value. The Commissioner concluded that the price in the agreement was not normal, invoking Rule 7 for best judgment quantification based on wholesale prices, resulting in a confirmed demand of around Rs. 4.57 crores.

The show cause notice alleged that the appellant was acting as an agent of MRL, which was denied by the appellant. The Commissioner focused on the valuation of goods rather than the agency relationship. The appellant argued that the impugned order did not rest on any agency relationship, challenging the application of Rule 7 for valuation based on wholesale prices. The Department argued that the agreed price was depressed, justifying inclusion of additional elements in the assessable value. However, the Tribunal found that mere adoption of wholesale prices without deductions for establishment charges and profit margin was not justified.

The appellant contended that the royalty payable to RM and interest on advances should be added to the wholesale price, affecting the duty amount. The Department disputed the figures provided by the appellant, highlighting the lack of relevant data for quantification. The appellant also presented financial hardship, showing losses and current assets, requesting a waiver of substantial deposit. Considering the circumstances and the existing bank guarantee, the Tribunal directed the appellant to deposit Rs. 50,00,000 within three months, with the balance of duty and penalty pre-deposit requirement waived upon compliance.

In conclusion, the Tribunal addressed the issue of waiver of pre-deposit of duty and penalty under Section 35F of the Act, considering the appellant's arguments regarding valuation, agency relationship, financial hardship, and the adequacy of the existing bank guarantee. The Tribunal directed a specific deposit amount within a timeframe, with the balance pre-deposit requirement waived upon compliance.