2006 (2) TMI 536 - AT - Central Excise

Summary

Issues:
1. Demand of duty under Compounded Levy Scheme for the period April 1998 to March 2000.
2. Reduction in capacity of induction furnace and its impact on duty determination.
3. Abatement claims and advance intimation of capacity reduction.
4. Financial hardships of the company and plea for waiver of pre-deposit.

Analysis:

1. The appellants were demanded duty of over Rs. 2.5 crores for the period under the Compounded Levy Scheme. The issue arose due to the reduction in capacity of the induction furnace, affecting the determination of duty. The appellants claimed that the capacity of the furnace reduced from 4 MT to 3 MT due to repairs, which was not considered by the Commissioner. The appellants argued that the demand based on the earlier ACP was unsustainable, emphasizing the financial difficulties faced by the company, leading to its closure and declaration as sick by BIFR.

2. The lower authorities allowed abatement claims for furnace closures, but the party failed to provide advance intimation of the reduction in furnace capacity as required by the rules. The Commissioner could not determine the effective date of the capacity change due to lack of intimation. The Tribunal acknowledged the financial hardships faced by the company but could not consider the revised capacity of 3 MT claimed by the party. Despite the company's closure and sick declaration, the Tribunal required evidence of the company's economic position as of a specific date before granting a full waiver of pre-deposit.

3. The party's failure to comply with the rule on advance intimation of capacity reduction led to challenges in determining the effective date of the capacity change. The Commissioner considered abatement claims but could not validate the revised capacity claimed by the party. The financial difficulties faced by the company were acknowledged, but the Tribunal required concrete evidence of the company's economic status as of a particular date to grant relief. The Tribunal directed the appellants to pre-deposit 25% of the duty demanded within a specified timeframe, emphasizing the importance of compliance.

4. The financial hardships of the company, closure, and declaration as sick by BIFR were crucial factors in the case. The Tribunal recognized the challenges faced by the company but stressed the need for documented evidence of the economic position for a specific period. Despite the company's closure, the Tribunal required pre-deposit of a portion of the duty demanded, highlighting the importance of compliance and evidence in such cases. Compliance reporting was set for a future date to monitor the pre-deposit requirement.