2002 (5) TMI 606 - AT - Central Excise

Summary

Issues:
1. Determination of annual capacity of production of induction furnace.
2. Confirmation of demand of duty and penalty imposed.

Analysis:
1. The appellant, M/s. Mawana Steels P. Ltd., appealed against the determination of their induction furnace's annual production capacity, duty demand confirmation, and penalty imposition by the Central Excise Commissioner. The appellant argued that the capacity was fixed at 2.813 MT based on measurements taken by the Revenue, but they requested a redetermination as they believed it was on the higher side. The Commissioner fixed the capacity at 2.99 MT, alleging an unauthorized enhancement to evade duty payment. The appellant contended that erosion of lining and patching in the furnace affects capacity, supported by a technical report. They denied changing the furnace's capacity and challenged the imposition of mandatory penalty under Section 11AC of the Central Excise Act.

2. The Department argued that measurements showed an increase in crucial parameters, justifying penalty imposition for unauthorized changes. The adjudicating authority adjusted the capacity to 2.99 MT based on two crucibles used alternatively. The Department emphasized that duty is payable based on the determined capacity, rejecting the appellant's claim of exceeding the show cause notice's scope. The Department supported penalty imposition due to unpermitted changes affecting capacity and duty liability.

3. The Tribunal analyzed the arguments and evidence presented. It noted that measurements were taken in the presence of the appellants and independent witnesses. The Tribunal found no fault in the Commissioner's decision to consider 25% erosion in the absence of contrary evidence. However, a calculation error in averaging the crucible capacities was identified. Despite this, the Tribunal agreed with the appellant that insufficient evidence existed to prove unauthorized capacity enhancement, leading to the dismissal of the penalty under Section 11AC. The Tribunal also concurred with the appellant that duty confirmation should align with the show cause notice period, remanding the matter for duty re-computation based on the revised total capacity of 2.965 MT.

4. In conclusion, the Tribunal ruled in favor of the appellant, dismissing the penalty and ordering a re-computation of duty in line with the revised total capacity. The appeal was disposed of accordingly, emphasizing the importance of evidence and adherence to specified notice periods in duty determinations.