NETWORK LIMITED Vs. COLLECTOR OF CENTRAL

JUDGEMENT

(1.) This petition under Article 226 of the Constitution is directed against the order dated 4 July, 1994 of the three members Bench of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, (for short "CEGAT") directing the petitioner to deposit a sum of rupees one crore towards 145 central excise duty within eight weeks of the receipt of the order and at the same time staying the balance duty amount and the penalty till the disposal of the appeal. This order was passed on an application by the petitioner under Section 35-F of the Central Excises and Salt Act, 1944, (for Short "the Act") pending appeal filed against the order dated 28 October, 1993 of the Collector of Central Excise, Meerut.

(2.) The petitioner, a public limited company, is engaged in the manufacture of electronic typewriters which item during relevant period (1982-85) was classifiable under Item 33-D of the First Schedule to the Act. The Collector by his order confirmed the demand of Rs. 1,16,85,378.00and imposed a penalty of Rs. 20 lakhs on the petitioner. CEGAT had pointed out that the matter related to the period 1982-85and had passed through different stages of adjudication, remands, re-adjudication, etc., including Courts orders, and further noted that in his adjudication order the Collector came to the following conclusion:- (1) M/s. Network Limited were charging lump-sum amount, but for central excise purposes they were making two sets of invoices bifurcating the technical service charges and standard accessories with intention to evade the payment of duty and that they had resorted to wilful mis-declaration on different counts as elaborated in the show-cause notice. (2) There was sufficient evidence to support the fact that their accessories were essential components of their electronic typewriter and as such the cost thereof was includible in the assessable value. (3) The decision of the Tribunal dt. 3.3.1989 being given inrelation to pricelist filed from 11.6.1986 was not relevant for the period prior to 11.6.1986, when the pattern of sale/price lists was not the same. (4) In terms of the Delhi High Court decision in the case of Duncans Agro Industries Ltd. v. UOI, the demands can be raised under Section 11A of the Act even when the assessments are provisional. (5) The amounts recovered through separate invoices under the heading Technical Service Charges were part and parcel of sale price and were includible in the assessable value and collection of extra charges in the invoices under the garb of technical service charges, etc., was nothing but a method to recover a part of the sale proceeds from their customer without subjecting such proceeds to appropriate assessment and payment of Central Excise Duty. (6) The charge of suppression of production and its removal is established against the appellants.

(3.) CEGAT examined various grounds urged by the petitioner in support of the application seeking stay of deposit of the duty and penalty pendingappeal. The petitioner had said that the Collector who adjudicated the matter was not competent to do so as when he passed the impugned order he was no more Collector Judicial; the assessments were provisional and there was no legal basis tor raising demand and that the demand could not be made before finalisation of the provisional assessments; sales, of the petitioner were in retail and petitioner had 146 in fact paid higher central excise duty without claiming permissible deductions and in this connection reference was made to an earlier decision of the CEGAT in the case of the petitioners itself [1989 (41) ELT 643 (Trib); as regards the bought out parts, their value should not have been included in the value of the typewriters, and if these were essential parts then the typewriter was not complete without them, and if these were not essential parts then their value could bot be included in the value of the typewriter; it was not a case of imposing penalty as the assessment had not been finalised; and that the fact that the petitioner had paid more duty was neither considered nor dealt with by the Collector. The CEGAT also noticed that on the financial aspect it was stated that the petitioner was a profit making company. All these points raised were examined quite indepth by the CEGAT and it came to the conclusion that the petitioner did not have a prinma fade case, and that the revenue it appeared had a good case on merits. The CEGAT did not make any detailed observations in the matter it being "sub-judice" but noticed that the matter involved not only the cost of the bought out items, but certain service charges also, and that each and every component making the demand had to be gone into carefully which was only possible at the stage of final hearing of the case. Then the CEGAT made the following operative order:- "We are thus of the view that if the appellants are desired to deposit the full duty amount demanded and the full penalty amount levied, then it may cause undue hardship. In the interest of justice and taking all the relevant considerations into account we direct the appellants to deposit a sum of Rs. One Crore (Rupeesonecroreonly)within8weeksofthe receipt of this order, and on depositing thesaid amount of Rs. One Crore the balance duty amount and the penalty amouts will be stayed till the disposal of the appeal. If the appellants fail to deposit the above sum within the time as stipulated above then this stay order shall be automatically vacated and the appeal shall also be liable for dismissal without any further reference to them."