2004 (11) TMI 494 - AT - Central Excise

Summary

Issues:
1. Determination of Annual Capacity of Production (ACP) by the Commissioner.
2. Consideration of periods of non-operation of furnaces in Unit 1 and Unit 2.
3. Abatement of duty during non-operation periods.
4. Compliance with Tribunal decisions on ACP determination.

Issue 1: Determination of ACP by the Commissioner
The appellants, engaged in manufacturing M.S Ingots, were under the compounded levy scheme. The Commissioner determined ACP based on furnace parameters declared by the party. The appellants paid duty based on their self-determined ACP, excluding non-operation periods. The Commissioner confirmed a duty demand against the party, leading to an appeal. The Tribunal previously remanded the case due to natural justice issues. The subsequent order confirmed a duty demand against the appellants for a specific period, now challenged along with a penalty imposition.

Issue 2: Consideration of non-operation periods of furnaces
The Commissioner did not account for non-operation periods of furnaces in Unit 1 and Unit 2 while determining ACP. The Commissioner believed ACP depended on furnace capability regardless of operation. The appellants argued that the Tribunal's previous decisions required functional furnaces for ACP determination, contrary to the Commissioner's view. The Tribunal found the Commissioner's approach incorrect and directed a fresh determination considering non-operation periods.

Issue 3: Abatement of duty during non-operation
The SDR argued that abatement of duty was allowed during non-operation periods. Referring to a previous Tribunal decision, it was stated that abatement was admissible only when all furnaces in the factory were non-operational. However, in this case, both furnaces were part of a single factory under one registration, making individual ACP determination irrelevant. The Tribunal emphasized that the non-working furnace during the compounded levy scheme period should not be included in ACP calculation.

Issue 4: Compliance with Tribunal decisions on ACP determination
The Tribunal emphasized compliance with its previous decisions on ACP determination. It directed the Commissioner to consider non-operation periods of the furnaces while determining ACP afresh. The Tribunal highlighted the importance of giving the party a reasonable opportunity to be heard before passing any order. Ultimately, the appeal was allowed, and the ACP determination was set aside for reassessment in line with Tribunal decisions.