Stamper cost amortisation and pre-deposit relief for compact disc manufacture were linked to actual output, not theoretical order size.

The cost of stampers used to manufacture compact discs had to be included in the final product cost, and amortisation was not confined to the first order alone or to a theoretical output not actually achieved. The more realistic basis was to spread the stamper cost over the actual number of compact discs manufactured using the stampers. As the first appellate authority had rejected the appeals for non-deposit, relief was granted only on part pre-deposit, and the matter was remanded for decision on merits.

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Issues: Whether the cost of stampers used in the manufacture of compact discs was to be amortised over the quantity covered by the first order or over the actual number of compact discs manufactured using such stampers, and whether the appeals could be entertained subject to pre-deposit.

Analysis: The Tribunal recorded that the cost of the stampers had to be included in the cost of the final product. It found it simplistic to confine amortization to the first order alone, and equally unrealistic to spread the cost over a theoretical output not actually achieved. On a prima facie view, the more realistic basis was to spread the cost over the actual number of compact discs manufactured using the stampers. Since the first appellate authority had rejected the appeals for non-deposit, the Tribunal granted relief conditional upon deposit of part of the duty demand and directed reconsideration on merits.

Outcome: The appeals were allowed subject to pre-deposit and the matter was remanded to the Commissioner (Appeals) for decision on merits.

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