1. This application seeks waiver of pre-deposit and stay of recovery in respect of a total amount of Rs. 71,67,765/-towards duty and Educational Cess as well as an equal amount of penalty. After examining the records and hearing both sides, we find that the above demand of duty is based on valuation of Graphic Art Film (GAF, for short) on MRP basis under Section 4A of the Central Excise Act. The claim of the assessee for valuation on the basis of transaction value under Section 4 of the Act was rejected. Hence, today, the tussle between the assessee and the Revenue is Section 4 versus Section 4A. Learned Sr.
Advocate for the appellants submits that the item under consideration is covered by the exemption under Rule 34 of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977 and, therefore, valuation of the goods under Section 4A is unwarranted. The precise provision cited by learned Counsel is Clause (a) of Rule 34 ibid, which states that nothing contained in the Rules shall apply to any package containing a commodity if the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw material or for the purpose of servicing any industry, mine or quarry. There is a proviso to this clause, which is not applicable. We have also seen a package containing the commodity in question. This package carries a label containing the following declaration: This film is specially packed for the exclusive use of printing and publishing industry as a raw material.
In the impugned order, learned Commissioner has refused to consider GAF as a raw material on the alleged ground that the product was not directly supplied to Industrial consumers but marketed through depots, dealers and retailers. However, there is no finding that the ultimate purpose of the product is not use by printing and publishing industry.
Learned JCDR has endeavoured to justify the finding of the Commissioner as to the status of the material (whether it is raw material or not) by relying on the Apex Court's judgment in Collector of Central Excise v.Ballarpur Industries Ltd. . The Art Film would not pass the test laid down by the Apex Court to be accepted as a raw material. This claim is sought to be rebutted by learned Counsel who is also claiming under the same decision of the Apex Court. His focus is on the penultimate sentence of para 5 of the judgment, which reads thus: In such a case, the relevant test is not its presence in the end-product, but the dependence of the end-product for its essential presence at the delivery end of the process. The ingredient goes into the making of the end-product in the sense that without its absence the presence of the end-product, as such, is rendered impossible.
Prima facie, the argument of learned Counsel is appealing. The Tribunal's decision in Controls and Switchgears Contractors Ltd. v.Commissioner of Central Excise, Noida is direct answer to the objection raised by JCDR that GAF was not used as a raw material as it was not marketed directly. Thus, the appellant's claim for assessment of the goods in terms of Section 4 of the Central Excise Act is forceful and they are entitled to waiver of pre-deposit and stay of recovery in respect of the adjudged dues. It is ordered accordingly.
2. Learned JDCR at this stage would like to have the appeal posted to a near date for hearing in view of the high stake involved therein.
Learned Counsel has no objection. However, the stake being less than Rs. 1 crore, we would advice either of the two sides to apply for early disposal of the case.