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of <h1>Tribunal upholds central excise duty on operational compensation. Appellant granted partial waiver.</h1> <h3>CAPARO ENGG. INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., INDORE</h3> CAPARO ENGG. INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., INDORE - 2011 (270) E.L.T. 679 (Tri. - Del.) Issues:1. Whether the 'operational compensation amount' received by the appellant is part of the prices of the goods sold and hence liable for central excise duty.2. Whether the appellant is liable to pay central excise duty, interest, and penalty as per the show cause notice issued by the department.3. Whether the appellant's plea for waiver from the requirement of pre-deposit of duty demand, interest, and penalty is acceptable.Analysis:Issue 1:The appellant, a manufacturer of Automobile Cabin parts, availed Cenvat credit and received operational compensation from M/s. Eicher Motors Ltd. based on a manufacture and supply agreement. The department issued a show cause notice for recovery of central excise duty on the operational compensation amount, considering it as part of the prices of goods sold. The Tribunal prima facie viewed that the compensation amount ensured a minimum Return on Equity for the appellant, making it part of the transaction value. The Tribunal directed the appellant to deposit the duty amount within a specified period, indicating that the compensation was linked to sales turnover and had a nexus with the sale of goods.Issue 2:The Commissioner confirmed the duty demand, interest, and imposed a penalty on the appellant. The appellant filed an appeal against this order. The appellant argued that the compensation amount was not related to the manufacturing activity or sale of goods, citing a Tribunal judgment in a similar case. The department contended that the compensation was for the failure of M/s. Eicher Motors Ltd. to lift the required quantity of goods, ensuring a minimum Return on Equity. The department relied on a decision by the Larger Bench to support its position. The Tribunal found that the compensation was indeed linked to sales turnover and upheld the duty demand and penalty, requiring the appellant to deposit the duty amount within a specified period.Issue 3:The appellant requested a waiver from pre-deposit of duty demand, interest, and penalty, claiming a strong prima facie case. The department opposed the waiver, asserting that the appellant failed to establish a prima facie case and suppressed relevant information. The Tribunal considered both arguments, concluding that the appellant needed to deposit the entire duty amount within a specified period. Upon compliance, the pre-deposit requirement for interest and penalty would be waived until the appeal's disposal.This detailed analysis covers the issues involved in the legal judgment, outlining the arguments presented by both parties and the Tribunal's findings regarding the central excise duty liability, pre-deposit requirement, and overall decision on the appeal.
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