2004 (6) TMI 511 - AT - Central Excise

Production capacity based duty - Annual capacity of production - Demand - Limitation - Misstatement/suppression of parameters

Summary

Issues:
Determining annual capacity production (ACP) under the compounded levy scheme for Central Excise duty liability based on mill parameters; Allegations of misstatement and suppression of mill parameters leading to duty demand; Contesting the demand, penalty, and interest imposed by the Commissioner; Acceptance of technical opinion regarding variation in mill parameters; Re-determination of ACP and duty liability based on correct mill parameters.

Analysis:
The case involves manufacturers of iron and steel products operating under the compounded levy scheme for Central Excise duty payment. The dispute arises from the alleged misstatement of mill parameters, specifically 'd' and 'n', leading to a re-determination of the rolling mill's annual capacity production (ACP) and subsequent duty liability. The Commissioner issued a show cause notice alleging intentional misrepresentation of parameters to evade duty payment, proposing a revised ACP and duty amount. The party contested the allegations and the imposed penalty of Rs. 11,43,000/-.

The key contention was regarding the variation in the 'd' parameter, with the appellants attributing it to wear and tear of bushes affecting the pinion-to-pinion center distance. The National Institute of Secondary Steel Technology (NISST) provided a technical opinion supporting the appellants' claim, explaining the impact of forces on the mill parameters due to non-uniform loading. The Tribunal found the technical opinion credible and faulted the Commissioner for rejecting it without valid reasons. The Tribunal concluded that the appellants did not alter the 'd' parameter willfully, as evidenced by the restoration of the correct value after repairs in August 1999.

Regarding the 'n' parameter, the department noted a minor variation which the appellants accepted, leading to no further action required. The Tribunal directed the re-calculation of duty based on correct parameters for the relevant periods, dismissing the misstatement/suppression allegations and overturning the penalty and interest charges. The appeal was allowed, setting aside the Commissioner's order and providing directions for re-quantifying the duty payable within the normal limitation period.