2007 (4) TMI 706 - AT - Central Excise

Summary

Issues involved: Determination of annual capacity of production for Central Excise duty payment, provisional capacity determination, imposition of penalty, finalization of capacity determination, entitlement to abatement of duty.

Determination of annual capacity of production: The appellants, engaged in manufacturing M.S. Ingots, were required to pay Central Excise duty based on their annual production capacity u/s 3A of Central Excise Act, 1944. The Commissioner provisionally determined their capacity as 9,600 MTs, which was challenged by the appellants due to inadequate power supply affecting their production capacity. The matter was referred back by the Bombay High Court for re-determination considering the power supply issue. However, the Commissioner held that he did not have the power to re-determine the capacity while the matter was pending before the Supreme Court, directing no coercive action until a final order was passed.

Imposition of penalty: The Additional Commissioner demanded duty from the appellants based on the provisional capacity determination, along with interest and penalty for non-payment within the prescribed time limit. This demand and penalty were confirmed by the Commissioner (Appeals).

Finalization of capacity determination: The appellants argued that until the capacity was finally determined, no duty payment or penalty imposition should occur. They highlighted that the show cause notices did not refer to subsequent orders of the Commissioner, and the capacity determination remained pending even after the High Court's direction. They requested finalization of the capacity determination before any duty demand or penalty imposition.

Entitlement to abatement of duty: The appellants also raised concerns about their entitlement to abatement of duty for the period when their factory was closed.

In conclusion, the Tribunal acknowledged that the capacity determination was provisional and pending finalization, making the confirmation of duty demand premature. They set aside the Commissioner (Appeals) order, emphasizing the need for the final determination of annual production capacity before adjudicating any demands. The appeal was allowed in favor of the appellants.