2001 (5) TMI 678 - AT - Central Excise

Summary

Issues:
1. Misdeclaration of the parameter "d" by the manufacturers under the Compounded Levy Scheme.
2. Imposition of mandatory penalty and interest under Sections 11AC and 11AB of the Central Excise Act.
3. Adjudication of the dispute regarding misdeclaration and suppression of facts.

Analysis:
1. The manufacturers, under the Compounded Levy Scheme, declared the parameters of their mill for determining the Annual Capacity of Production (ACP) as per the ACP Rules. A discrepancy was found during verification regarding the value of parameter "d," leading to a difference in the final ACP determination. The Department alleged misdeclaration and issued a show cause notice (SCN) for interest and penalties. The Additional Commissioner imposed a penalty, which was later challenged and overturned by the Commissioner (Appeals), leading to the Department's appeal.

2. The Department argued that the misdeclaration of parameter "d" and subsequent acceptance by the manufacturers justified the penalties under Sections 11AC and 11AB. However, the manufacturers contended that the declared value was provisional, and there was no wilful misstatement or suppression. They argued that the Compounded Levy Scheme's provisions covered the situation, making the penalties inapplicable. The Tribunal found that the duty shortfall was rectified before the SCN, rendering the demand baseless. As there was no evidence of wilful misdeclaration, the imposition of penalties under Sections 11AC and 11AB was deemed unjustified.

3. The Tribunal emphasized that the case involved the provisional determination of annual production capacity, distinct from provisional duty assessment cases. The cited case laws were deemed irrelevant as they pertained to different scenarios. Ultimately, the Tribunal rejected the Revenue's appeal, upholding the Commissioner (Appeals) decision, as there was no basis for imposing penalties due to the absence of wilful misdeclaration or suppression.