2008 (10) TMI 197 - HC - Central Excise

Production Capacity Based Duty under section 3A of the Central Excise Act, 1944 Tribunal had directed the petitioner to pre-deposit a sum of Rs. 6,00,000/- against a demand of duty amounting to Rs. 18,13,200/- as duty - The main contention of the e petitioner is that the demand for payment of excise duty has been made without finally assessing the production of the petitioner Company Department contended that it is the matter is entirely within discretionary power of tribunal Held and directed the tribunal to Tribunal, to dispose of the appeal, pending on its file, on merits, and in accordance with law, within a period of eight weeks from the date of receipt of a copy of this order, without insisting on the petitioner making the pre-deposit

Summary

Issues:
1. Validity of excise duty demand without final assessment of production capacity.
2. Dismissal of appeal against duty demand.
3. Application for waiver of pre-deposit under Section 35F of the Central Excise Act.

Analysis:
1. The petitioner, engaged in manufacturing steel products under the Compounded Levy Scheme, challenged the excise duty demand for the period from October 1999 to March 2000. The annual production capacity was provisionally fixed without expert verification, leading to a show cause notice for duty payment. Despite detailed responses, the Assistant Commissioner confirmed the demand. Subsequent appeals were dismissed without due consideration, prompting the petitioner to file a writ petition under Article 226 of the Constitution.

2. The petitioner contended that the demand lacked a final assessment of production capacity by the competent authority as required under the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997. The first respondent directed a deposit of Rs. 6,00,000 without addressing the petitioner's submissions. The Court granted an interim stay against this order, emphasizing the need for a fair disposal of the appeal without insisting on the pre-deposit.

3. The respondents argued for the pre-deposit requirement citing precedents, asserting the Tribunal's discretion in such matters. Citing the Jaypee Rewa Plant case, it was highlighted that interference by a Writ Court in the Tribunal's discretion is limited unless exercised arbitrarily. The Court, considering all submissions, directed the Tribunal to decide the appeal within eight weeks without mandating the pre-deposit, given the ongoing stay order. The writ petition was disposed of accordingly, emphasizing justice and procedural fairness.