2002 (3) TMI 126 - AT - Central Excise

Summary

Issues:
1. Duty payment based on Annual Capacity of Production
2. Claim of abatement during factory break-down
3. Dispute over actual production and duty liability determination
4. Applicability of Rule 96ZO(1) for payment of duty
5. Commissioner's rejection of abatement claim and duty liability assessment

Analysis:
1. The appellants, engaged in manufacturing non-alloy steel ingots, opted for duty payment under Rule 96ZO(1) based on the Annual Capacity fixed by the Commissioner. The dispute arose when the appellants were alleged to have underpaid duty, leading to a demand for the balance amount along with penalties and interest.

2. During a factory break-down period, the appellants claimed abatement, which was denied by the Commissioner citing non-fulfillment of necessary conditions. The appellants argued that they had duly informed the authorities about the closure and resumption of production, supported by acknowledgments.

3. Another show cause notice was issued for recovery of duty, disputing the appellants' claim of lower actual production compared to the fixed Annual Capacity. The Commissioner rejected this claim, stating a lack of evidence like RG-1 registers and RT-12 returns. The Tribunal found merit in the appellants' argument and remanded the matter for proper verification of production records.

4. The mode of duty payment under Rule 96ZO(1) was crucial in determining the appellants' liability. The Tribunal differentiated this rule from Rule 96ZO(3) based on a Supreme Court decision, emphasizing the applicability of Section 3A(4) for re-determination of duty in case of actual production being lower than the fixed capacity.

5. The Commissioner's rejection of the abatement claim and duty liability assessment was challenged by the appellants, highlighting discrepancies in the observations made. The Tribunal directed the Commissioner to reevaluate the appellants' liability considering all relevant aspects and claims, including the benefit of Section 3A(4) for duty re-determination. The appeals were allowed for further review and decision.