2002 (5) TMI 378 - Commission - Central Excise

Issues Involved:
1. Determination of Annual Capacity of Production (ACP) and duty liability.
2. Validity of different certificates (Certificate I, II, III) for furnace capacity.
3. Relevance of actual production and power consumption in determining ACP.
4. Legality of the Commissioner's order dated 29-3-2001.
5. Immunity from interest and penalties.

Detailed Analysis:

1. Determination of Annual Capacity of Production (ACP) and Duty Liability
The applicant, a manufacturer of MS Ingots, filed a declaration under the ACP Rules, which were promulgated under Section 3A of the Central Excise Act, 1944. The Commissioner initially determined the ACP based on Certificate I, which was later revised based on Certificate II, leading to a higher duty liability. The Bench ultimately upheld the capacity of 1.5 tonnes as indicated in Certificate I, resulting in an ACP of 4800 tonnes and a corresponding duty liability of Rs. 2,50,000/- per month. The total duty for the period covered by the five SCNs was determined to be Rs. 77,50,000/-, with Rs. 35,55,094/- already paid, leaving a balance of Rs. 41,94,906/- to be paid by the applicant.

2. Validity of Different Certificates for Furnace Capacity
The Bench examined three certificates to determine the correct furnace capacity:
- Certificate I: Initially used by the Commissioner, indicated a capacity of 500 kgs but also mentioned a crucible volume to hold 1,500 kgs of steel.
- Certificate II: Issued after a re-examination, certified a capacity of 2.75 tonnes, but was found to have several inconsistencies and credibility issues, including a 30% variation in measurements.
- Certificate III: Issued by SISI, indicated a melt rate of 0.77 tonnes per hour and a mass in the crucible of 1.54 tonnes. The Bench found that the dimensions in Certificates I and III were more or less the same, leading to the conclusion that the capacity of 1.5 tonnes indicated in Certificate I was more apt for adoption.

3. Relevance of Actual Production and Power Consumption in Determining ACP
The Bench noted that the ACP Rules specify that duty is to be discharged based on installed capacity, not actual production or power consumption. The applicant's argument that excess power consumption indicated a lower furnace capacity was rejected, as the power consumption data provided by the applicant showed that the power consumed was sufficient to run a 1.5 tonne crucible.

4. Legality of the Commissioner's Order Dated 29-3-2001
The Bench held that the Commissioner's order dated 29-3-2001, which revised the ACP based on Certificate II, was non est (invalid) as the Settlement Commission had exclusive jurisdiction over the case once the application was admitted. The Bench also referenced the ruling of the Special Bench of the Income Tax Settlement Commission in Damani Brothers, which supported this view.

5. Immunity from Interest and Penalties
The Bench granted immunity from interest and penalties to the applicant and co-applicants, considering their cooperation in the settlement proceedings. The applicant was required to pay the balance duty amount within 30 days, failing which interest would be applicable as per Section 32F(10) of the Central Excise Act, 1944. Specific penalties were imposed on the applicant and the authorized signatory, but immunity was granted from prosecution under the provisions of the Central Excise Act, 1944.

Conclusion:
The case was settled with the Bench determining the ACP based on Certificate I, fixing the annual production capacity at 4800 tonnes and the corresponding duty liability at Rs. 2,50,000/- per month. The applicant was required to pay the balance duty amount of Rs. 41,94,906/- within 30 days. Immunity from interest, prosecution, and excess penalties was granted, with specific penalties imposed on the applicant and the authorized signatory. The immunities granted would be withdrawn if the differential duty was not paid within the specified time or if the settlement was found to have been obtained by fraudulent means.

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