2007 (3) TMI 593 - AT - Central Excise

Summary

Issues:
1. Determination of Annual Capacity of Production (ACP) under Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997.
2. Duty liability calculation based on parameter changes.
3. Show-cause notices for duty payment default.
4. Challenge against ACP determination and duty demands.
5. Appeal against Commissioner's order confirming duty demand.
6. Imposition of penalty and interest under Rule 96ZP(3).
7. Challenge against penalty imposition.
8. Modification of penalty and interest in appeal.

Analysis:

1. The appellants were manufacturing "Hot re-rolled products of non-alloy steel" and were liable to pay duty based on the ACP determined by the Commissioner under the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997. The ACP was determined at 29,206 MTs initially and later adjusted based on changes in parameters.

2. Duty calculation was based on the parameter "(d)" - where above 160 mm, duty was calculated at Rs. 300/- per MT, and below 160 mm, duty was calculated at Rs. 150/- per MT. The duty was to be paid monthly by the 10th of each month.

3. Show-cause notices were issued for defaulting duty payments for various periods, demanding outstanding amounts totaling to Rs. 1,06,39,062.

4. The appellants challenged the ACP determination and duty demands, arguing that the ACP should be re-determined based on the new "(d)" factor. The Commissioner upheld the duty demands for the period from September 1997 to December 1998, and from January 1999 to March 2000.

5. The Commissioner confirmed the duty demand of Rs. 39,87,205 for the period from September 1997 to March 2000. The appeal against this order was filed by the assessee.

6. The Commissioner imposed a penalty of Rs. 39,87,205 on the assessee under Rule 96ZP(3) and directed them to pay interest on the duty amount. The penalty and interest imposition were challenged in a separate appeal.

7. The Tribunal upheld the duty demand for the period from January 1999 to March 2000. The argument for a pro-rata ACP calculation was rejected, and the duty amount of Rs. 28,94,805 was sustained.

8. The Tribunal modified the penalty imposition, stating that a penalty equal to duty under Rule 96ZP(3) is not mandatory, and a lesser penalty can be imposed based on the facts and circumstances of the case. The penalty was reduced to NIL, but the assessee was required to pay interest on the belatedly paid duty amounts.

This detailed analysis covers all the issues involved in the legal judgment, addressing the ACP determination, duty liability calculations, show-cause notices, challenges against duty demands, and the imposition and modification of penalties and interest.