Deferred sales tax retained its tax character for excise valuation, supporting waiver of pre-deposit in the demand dispute.

Amounts collected under a deferred sales tax scheme retained the character of sales tax, and the amendment permitting premature payment at net present value meant the deferred tax was deemed paid on such payment. For excise valuation under Section 4 of the Central Excise Act, sales tax actually paid or payable was therefore excludible from transaction value. On that basis, the appellant made out a prima facie case for waiver of pre-deposit in the excise demand for duty, interest and penalty, and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit in a demand relating to excise duty, interest and penalty on the amount of deferred sales tax collected from customers.

Analysis: The amount in dispute was sales tax collected under the deferred sales tax scheme and the amendment to Section 38(4) of the Bombay Sales Tax Act, 1959 permitted premature payment of the deferred tax at its net present value, upon which the deferred tax stood deemed to have been paid. The amount collected therefore retained the character of sales tax, and for the purpose of Section 4 of the Central Excise Act, 1944, sales tax actually paid or payable was excludible from the transaction value. On these facts, the appellant established a prima facie case; the Revenue's reliance on other decisions did not alter that conclusion at the stay stage.

Conclusion: Waiver of pre-deposit was granted and recovery of the demanded duty, interest and penalty was stayed pending disposal of the appeal.

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