2002 (2) TMI 292 - AT - Central Excise

Summary

Issues:
1. Dispute regarding duty liability based on the Annual Capacity of Production (ACP) fixed by the Commissioner.
2. Applicability of Section 3A(4) of the Central Excise Act, 1944 in determining duty liability.
3. Comparison between actual production and ACP for payment of duty.
4. Interpretation of provisions under Rule 96ZO(1) and Rule 96ZO(3) of the Central Excise Rules, 1944.
5. Consideration of past production performance in determining duty liability.

Analysis:
1. The appellants, engaged in manufacturing M.S. Ingot of Non-alloy Steel, had their ACP determined as 20,800 MT by the Commissioner. Dispute arose when show-cause notices were issued for not charging duty as per the fixed ACP. The appellants argued that duty liability should be based on actual production if it was less than the ACP determined. The Commissioner disagreed, leading to the appeal (Para 2-3).

2. The adjudicating authority insisted on payment based on ACP under Rule 96ZO(1) and disregarded the appellants' claim under Section 3A(4). The appellants argued that ACP should be re-determined if actual production is less, citing precedents. They contended that denial of this benefit would defeat the purpose of the scheme for compounded levy (Para 5).

3. The appellants never opted for Rule 96ZO(3) but chose Rule 96ZO(1) for duty payment, which allows for ACP-based duty calculation. Precedents clarified that Section 3A(4) can be invoked if ACP is disputed, enabling duty payment based on actual production. The Tribunal found the appellants eligible for this provision and remanded the matter for redetermination of duty liability (Para 6).

4. Rule 96ZO(1) mandates duty payment at Rs. 750 per MT on ACP, while Section 3A(4) allows for duty calculation based on actual production if lower than ACP. The Tribunal emphasized the necessity of fixing ACP first to compare with actual production for duty payment. The decision to remand was based on this interpretation (Para 7).

5. The Tribunal acknowledged the appellants' claim of lower annual production than the fixed ACP, invoking Section 3A(4) and (5) for redetermination of duty liability. The appellants were directed to provide evidence to support their claim before the adjudicating authority. The appeal was allowed for remand (Para 8-9).