2003 (10) TMI 599 - AT - Central Excise

Summary

Issues:
Capacity determination under Compounded Levy Scheme.

Analysis:
The appellants, manufacturers of mild steel ingots, discharged their Central Excise duty liability under the Compounded Levy Scheme, which levies duty based on production capacity. The impugned order determined the furnace capacity of the appellant at 3.5 M.T. and annual capacity at 11488 M.T., while the appellant declared it as 3 M.T. The contention in the appeal was that the authority should have relied on the assessee's declaration of 3 M.T. furnace capacity, supported by an invoice indicating the reduction from 4 M.T. to 3 M.T. The appellant argued that determining capacity would amount to assessing actual production, contrary to the scheme's intent.

The Respondent argued that the sale and purchase of the furnace were not involved, and the invoice provided was for a job work to reduce coil size, not indicating the sale of a furnace. Verification revealed the capacity as 3.59 M.T., not 3 M.T. as claimed. The Tribunal examined the records and submissions, concluding that the job work invoice did not certify a furnace capacity but alteration of an existing furnace from 4 M.T. to 3 M.T. The verification by authorities was deemed justified, as no specific machine capacity was certified by the manufacturer due to the alteration. The determination of annual production capacity based on the altered furnace capacity was upheld as per rules, not tantamount to levying duty on actual production. The Tribunal rejected the appeal, finding the capacity determination and subsequent production capacity assessment in accordance with regulations.

In summary, the Tribunal upheld the authority's determination of the furnace capacity based on alteration from 4 M.T. to 3.59 M.T., rejecting the appellant's argument that it amounted to assessing actual production. The Tribunal emphasized that the alteration did not involve the purchase and installation of a new furnace with certified capacity, justifying the verification process and subsequent annual production capacity determination. The appeal was dismissed, affirming the validity of the capacity assessment under the Compounded Levy Scheme.