2002 (2) TMI 1087 - AT - Central Excise

Summary

Issues:
1. Determination of Annual Capacity of Production (ACP) for levy of duty under Section 3A of the Central Excise Act, 1944.
2. Claim of abatement from payment of duty due to a breakdown of one furnace.
3. Imposition of penalty under Rule 96ZO(3) for short payment of duty.

Issue 1: Determination of Annual Capacity of Production (ACP)
The appellants, manufacturers of non-alloy steel ingots, challenged the ACP fixed by the Commissioner at 14,400 MT, leading to a monthly duty payment of Rs. 7.5 lakhs. The appellants argued that due to a breakdown of one furnace, their duty liability should be restricted to the operational furnace's capacity of 3 MT. The Commissioner rejected this claim, emphasizing that ACP determination was based on factory capacity, not individual furnaces. The Commissioner found the appellants failed to provide evidence supporting their claim, such as a Chartered Engineer's certificate. The Commissioner held that the appellants must pay duty as per the ACP fixed.

Issue 2: Claim of Abatement from Duty Payment
The appellants sought abatement from duty payment under Section 3A(3) due to the non-operation of one furnace. They provided several pieces of evidence, including letters informing about the breakdown, but the Commissioner did not consider these in his decision. The Tribunal remanded the case for a fresh decision, emphasizing the need to verify the non-operational furnace's status and fix ACP accordingly. The Commissioner's failure to re-examine the evidence and fix ACP only for the operational furnace led to the order's setting aside. The matter was remanded for a new decision.

Issue 3: Imposition of Penalty
The Commissioner imposed a penalty under Rule 96ZO(3) for short payment of duty and confirmed a demand of Rs. 75 lakhs. However, due to the setting aside of the ACP determination, the penalty and duty demand were also set aside. The Tribunal remanded the matter for reconsideration, emphasizing the need for a fresh decision after providing a reasonable opportunity of hearing to the appellants.

In conclusion, the appeals were allowed by remand for a de novo consideration of the ACP determination, abatement claim, and penalty imposition, ensuring a fair opportunity for the appellants to present their case.