2003 (9) TMI 649 - AT - Central Excise

Summary

Issues:
Appeal against dropping proceedings for non-payment of duty on non-alloy steel ingots based on factory closure and shift to manufacturing cast articles of iron and steel.

Analysis:
The issue in this case revolves around the appeal filed by the Revenue against the dropping of proceedings by the Commissioner of Central Excise, Patna, concerning the demand of duty on non-alloy steel ingots. The respondents were issued a show cause notice for non-payment of duty amounting to Rs. 42,00,000 for the period from September 1997 to March 1998. The crux of the matter was the alleged failure of the respondents to pay duty at the prescribed rate on the pro rata production of annual capacity determined under the Induction Furnace Annual Capacity Determination Rules, 1997. The respondents contended that they had ceased production of non-alloy steel ingots, switched to manufacturing cast articles of iron and steel, and duly informed the authorities about this change. The Commissioner, after considering the evidence and submissions, dropped the proceedings against the respondents.

The Commissioner's order was based on various documents and reports confirming the closure of the factory and the shift in production to other products not covered under the duty provisions. The Commissioner noted that the declarations made by the respondents were accepted by the Central Excise authorities, and the verifications conducted supported the claim of ceasing non-alloy steel ingot production. The Commissioner found no reason to disbelieve the respondents' version, especially considering the closure of the factory and the subsequent switch in production. The Revenue contended that the presence of ingots and billets in the factory contradicted the respondents' declarations and argued that the duty liability should be upheld.

However, the Tribunal upheld the Commissioner's decision, emphasizing the clear communications from the respondents about the cessation of non-alloy steel ingot production and the requests to withdraw the order fixing the annual capacity. The Tribunal found that the mere presence of ingots and billets in the factory did not prove production of non-alloy steel ingots, especially when supported by official verifications and acknowledgments of the change in production. Therefore, the Tribunal rejected the Revenue's appeal, affirming the Commissioner's decision to drop the proceedings against the respondents for non-payment of duty on non-alloy steel ingots.