2006 (6) TMI 316 - AT - Central Excise

Summary

Issues:
1. Appeal against demand of duty based on original and revised ACP.
2. Misconstrued provision of Rule 3 of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998.
3. Validity of demands of duty based on the struck down Rule 3.
4. Liability to pay interest and penalty for belated duty payment.

Analysis:

1. Appeal against demand of duty based on original and revised ACP:
The judgment dealt with multiple appeals challenging demands of duty based on the Annual Capacity of Production (ACP) determined by the Commissioner for specific periods. The Tribunal dismissed an appeal against the original ACP determination as it overlapped with another appeal against the revised ACP. This decision rendered the earlier appeal infructuous and led to its dismissal.

2. Misconstrued provision of Rule 3 of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998:
The appellants contended that the ACP should be determined on a pro rata basis as the chambers of the stenter in question had a rail length of 3.00 meters on each side, falling short of the required 3.05 meters. However, the Tribunal upheld the Commissioner's interpretation that chambers with a rail length of 3.00 meters were to be considered as one chamber, as per the rules.

3. Validity of demands of duty based on the struck down Rule 3:
The appellants argued that Rule 3 of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998, was struck down by the Madras High Court, seeking to set aside the demands of duty. However, the Tribunal found that the appellants failed to provide satisfactory responses regarding the correct payment of duty under Section 3 of the Central Excise Act. The Tribunal emphasized that the appellants could not challenge the Commissioner's orders on contradictory grounds.

4. Liability to pay interest and penalty for belated duty payment:
Regarding the belated duty payment, the Tribunal analyzed the imposition of interest and penalty. While the penalty provision was deemed mandatory, the determination of the penalty amount was subject to discretion based on principles of justice. The Tribunal directed the Commissioner to quantify the penalty considering the circumstances, including the company's declaration as sick by the BIFR and the irregularity in duty payments. The Tribunal emphasized the need for a fair assessment of penalty in line with the facts and circumstances presented.

In conclusion, the Tribunal upheld the demand of duty based on the revised ACP, directed the quantification of penalty, and disposed of the appeals E/986/2004 and E/308/2005 after considering all relevant aspects and ensuring a fair process for the assessee.