Common input allocation dispute sustains percentage levy, while penalty is declined on practical difficulty grounds.

Where common inputs are used in the manufacture of excisable and non-excisable goods, and no reliable evidence of input allocation is produced, the prescribed 10% of sale value is attracted. The text also notes that the matter followed earlier similar cases and that judicial discipline and consistency were applied. Penalty, however, was declined in view of practical difficulties in interpreting the statutory position. The final position was that the 10% deposit direction was sustained, while relief from penalty was granted, subject to verification of any amount already paid and appropriated.

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Issues: (i) Whether 10% of the sale value was payable where common inputs were used in the manufacture of excisable and non-excisable goods and no evidence of allocation of inputs was produced; (ii) whether penalty was leviable.

Issue (i): Whether 10% of the sale value was payable where common inputs were used in the manufacture of excisable and non-excisable goods and no evidence of allocation of inputs was produced.

Analysis: The dispute was treated as covered by an earlier batch of cases on similar facts. In the absence of evidence showing that allocation of inputs was verifiable, the prescribed levy was held to be attracted. The order also noted the need to follow judicial discipline and consistency.

Conclusion: The requirement to deposit 10% of the sale value was upheld.

Issue (ii): Whether penalty was leviable.

Analysis: In view of the practical difficulties noticed in interpreting the statutory position, the imposition of penalty was declined.

Conclusion: No penalty was imposed on the appellant.

Final Conclusion: The appeal was disposed of by sustaining the 10% deposit direction while granting relief from penalty, subject to verification of any amount already paid and appropriated.

Ratio Decidendi: Where common inputs are used for both excisable and non-excisable goods and no reliable evidence of input allocation is shown, the prescribed percentage levy is attracted, while penalty may be declined on the facts.

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