TMI Blog2003 (5) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed that the problem was due to sanctioned power load inasmuch as the furnace required 3000 KW power whereas the Power sanctioned to them was less and advised the Appellants to decrease the furnace capacity to 4 to 4.5 MT by raising up the bottom to match the power of 1900 KVA; that they assigned the said work to Mr. B.K. Shukla, Proprietor of M/s. Furcon Consultancy Services, Rajkot who started the work of modification on 14-5-1997; that on that very day, they informed the Range Superintendent about the modification in the capacity of Furnace under letter dated 14-5-97; that reduction in the capacity of the furnace was completed on 16-5-97 and Mr. Shukla certified that capacity had been reduced to 4.5 MTs; that this fact was also intimated to Superintendent under letter dated 16-5-97. 2.2 The learned Advocate, further, mentioned that after introduction of levy of duty on the basis of annual capacity of production (ACP) with effect from 1-9-97, they opted for payment of duty on compounded basis under Rule 96ZO of the Central Excise Rules , 1944 and declared the capacity of their furnace to be 4.5 MTs.; that ACP was provisionally fixed by the Commissioner to be 4.5 MTs; that Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner s opinion, energy saving was the main purpose of making modifications, that this is absolutely not correct; that the problem faced by them was that the furnace was taking longer time for melting; that Shri B.K. Shukla has deposed in his statement that he had advised the Appellants to go for new crucible otherwise their energy consumption would be higher and there would be loss in production; that as they did not obtain a new crucible, their energy consumption had gone up. He also mentioned that Shri Yatgiri, Assistant Manager of M/s. Inductotherm, had deposed in his cross-examination that he had advised the Appellants to increase the power capacity or to reduce the capacity of the furnace as the unchanged furnace required power connection of 3600 KW while their connection was only 1900 KW; that Gujarat Electricity Board had informed them under letter dated 16-9-97 that their total power requirement of 3000 KVA cannot be catered at 11 KV as per Feasibility received from one field staff ; that Shri Yatgiri had also deposed that raising the bottom of the furnace was one of the ways to reduce the capacity of the furnace; that Shri Yatgiri confirmed the reduction in the capacity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly taken as it included the weight of some of the moulds with ingots; that moreover during the Panchnama, the crucible was filled up to the top of the crucible; that it should have been filled up to the coil level only; that the officers who conducted verification on 8-3-2000, found the capacity to be 4.5 MTs. after taking melting in three heats. He contended that the Adjudicating Authority has contradicted himself as on the one hand he said that the capacity was found to be 5.86 MTs while on the other hand he said that it was nearer to the level of 8 MTs. 4. The learned Advocate, further, contended that the Commissioner seems to have laboured under a misconception of the scope of ACD Rules as he had observed that change in the working capacity did not lead to change in the installed capacity of the furnace; that the ACD Rules do not talk of installed capacity as the Rules require capacity of the furnace installed in the factory to be determined; that the Rules even provide for increase and reduction of the capacity of the furnace even where a particular capacity has already been determined; that, therefore, where any change is effected before or after the introduction of compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined is the Annual Capacity of Production of the furnace installed in the factory of the Appellants; that on the basis of the declaration filled by the Appellants, the Commissioner had fixed the capacity provisionally and they had given an undertaking for payment of differential duty; that it is the case of the Appellants that the original invoice of M/s. Inductotherm who had supplied the furnace has no relevance in determining the annual capacity of production of the said furnace; that Rule 3 of the ACD Rules, 1997, directs the Commissioner to ascertain the total capacity of production of the furnace; that a joint physical verification of the capacity was undertaken on 28-12-99; that the parameters of the induction furnace were measured by Shri Bacchan Singh Chauhan, Production Manager in presence of two independent witnesses and Shri Hitesh Bhai Shah, Director, under regular Panchnama and the capacity of furnace arrived at after calculating the volume of crucible was found to be 7.97 MTs; that Shri Dipak Shah, Chartered Engineer had admitted in his statement that he had certified the capacity of furnace on the basis of documents produced and the information made available by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RGI record of the Appellants reflects production up to 76 MTs (Para 3.6 of the impugned Order); that Shri Shukla had claimed that the consumption of electricity shall be lesser than the power consumption with installed capacity; that on the other hand, the power consumption, after the so called modification, had considerable increased instead of going down (Para 3.7 of the impugned Order). He also contended that it is not possible to get production of 5.86 MTs in a single heat from the furnace of capacity of 4.5 MTs. The learned Senior Departmental Representative submitted that it is thus clear that the certificate by Shri Shukla about capacity of furnace being 4.5 MTs has been issued without there being actual modification in the capacity of the furnace. He also mentioned that subsequent verification done on 8-3-2000 cannot have any evidentiary value inasmuch as the said evidence had been presented after the investigation had commenced and the Appellants had the opportunity to make alteration; that the verification on 28-12-99 was done in the presence of the Director of the Appellants and in view of other evidences such as production, power consumption, etc., the same is authe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner which are contained in the impugned Order. The Commissioner has initially provisionally determined the capacity of the furnace to be 4.5 MT on the basis of the declaration filed by the Appellants. But on the basis of an intelligence to the effect that they had suppressed the actual capacity of production, a team of Central Excise Officers visited the factory premises of the Appellants on 28-12-1999 and the measurement of the furnace was taken by the Production Manager of the Appellants in the presence of Shri Hitesh Bhai Shah, Director of the Appellants and independent witnesses. The capacity of furnace arrived at after calculating the volume of crucible was found to be 7.97 MT. Weight of MS Ingots, including runners and risers, manufactured in a single heat was found to be 5.86 MT on weighment. These facts are duly recorded in Panchnama and Joint Verification Report signed both by the Director and Production Manager of the Appellants besides Panchas and the officers of the Department. We observe from the perusal of Panchnama and Joint Verification Report that both Director and Production Manager have signed the same without any reservation or any indication t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veracity of these Production Reports. When the Production Manager was questioned about records maintained by them in respect of production, he had deposed that they give lists of number of ingots to the office and do not keep any copy of such list. Further, it has also come on record that one heat takes about 1 hour and 30 minutes and one cannot run the furnace 100% of the time as one will require time for deslagging, recharging, etc. We also observe that no averments has been made to this effect in the Memorandum of Appeal challenging the finding of the Commissioner in Para 3.6 of the impugned Order except mentioning that the production can vary depending upon various factors such as power supply, quality of scrap, amount of scrap fed into the crucible. The Commissioner has recorded a finding in the impugned Order that Shri B.K. Shukla had stated that the maximum production of 55 MT only could be obtained and that too under ideal conditions. No proof of existence ideal conditions has been brought on record. 10. The learned Senior Departmental Representative has highlighted the fact that on the date of visit of officers on 28-12-99, the weight of ingots in one heat was found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. Commissioner of Central Excise Indore [2001 (129) E.L.T. 334] = 2001 (43) RLT 533 (CEGAT-B) that Samrat International Pvt. Ltd. envisages payment of duty on provisional basis pending decision of classification list or price list for these payments to be treated as provisional procedure contemplated by Rule 9B is not to be followed. Both the circulars of the Board also do not support the contention of the Appellants that there cannot be provisional assessment in the case of Compounded Levy Scheme. It has been mentioned in Circular dated 25-7-97 that Commissioners are required to determine the Annual Capacity of Production promptly and it is requested that such orders may kindly be issued and arranged to be communicated well before 31-8-97. The Scheme itself was postponed and it came into force from 1-9-97. The Commissioner has issued the provisional Order. Thus the demand of duty is not barred by time-limit. We, accordingly, uphold the demand of duty. 12. We, however, agree with the learned Advocate that confiscation of the seized goods is not warranted as the duty under Section 3A of the Central Excise Act is payable on the basis of the annual capacity of production as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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