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2009 (2) TMI 403 - AT - Central ExciseProduction capacity based duty- M/s Jai Ambe Textiles were engaged in the processing of textile fabrics with the aid of power operated machinery including Hot Air Stenter. The Government of India introduced levy of Central Excise duty on the basis of Annual Production Capacity and appellants were covered by the scheme. A show cause notice proposing to include the length of the drying cylinders for the purpose of fixation of APC for the period from 16-12-1998 to 30-4-1999 and confiscation of seized fabric during the visit and penalties etc. Held that- We uphold the APC fixed for the year 1999-2000 by the Commissioner in the impugned order. The revision of APC fixed for the year 1998-1999 is set aside. Penalty of Rs.3,97,894/- and Rs.10,000/- imposed under Rule 96ZQ are also set aside in view of the fact that revision of APC has been set aside. The confiscation of 50,401 linear metres of processed manmade fabrics valid at Rs.7,56,015/- under sub rule 6 of Rules 96ZQ is upheld and the fine in lieu of confiscation of Rs.1,00,000/- imposed by Commissioner is also upheld. - Confiscation of land, building, plant and machinery is set aside. The appeal filed by the Revenue is allowed and the impugned order of the Commissioner (Appeals) dated 12-9-2003 is set aside and the matter is remanded to the Original Adjudicating Authority for a fresh decision in the light of our observations.
Issues Involved:
1. Validity of the Commissioner's order revising Annual Production Capacity (APC) for the year 1999-2000. 2. Inclusion of drying range cylinders in the APC calculation. 3. Observance of principles of natural justice regarding the supply of documents, photographs, and video cassettes. 4. Confiscation of seized fabrics and imposition of penalties for the period 16-12-1998 to 30-4-1999. 5. Appeal by Revenue against the order of Commissioner (Appeals) dated 12-9-2003. Detailed Analysis: 1. Validity of the Commissioner's Order Revising APC for 1999-2000: The appellants argued that the Commissioner's order revising the APC amounted to a review of his own order, which he was not empowered to do. They contended that the APC fixed on 21-4-1999 was final, and any modification should have been appealed. The Tribunal examined the Textile APCD Rules and found that the Commissioner was required to fix the APC annually based on the previous year's production and clearance data. Therefore, the APC fixed on 21-4-1999 was only for the year 1998-1999, and the Commissioner was correct in fixing the APC afresh for 1999-2000. The Tribunal upheld the Commissioner's order, stating it was not a review but a fresh determination. 2. Inclusion of Drying Range Cylinders in APC Calculation: The appellants contended that the drying range cylinders should not be included in the APC calculation as they were not physically attached to the stenter and did not aid in the process of heat setting or drying. The Tribunal referred to the relevant rules and expert opinions, concluding that the drying range cylinders, although not physically attached, were functionally part of the process and aided in heat setting and drying. The Commissioner's detailed reasoning and personal visit to the unit supported this conclusion. The Tribunal upheld the inclusion of the drying range cylinders in the APC calculation. 3. Observance of Principles of Natural Justice: The appellants argued that the non-supply of documents, photographs, and video cassettes deprived them of their right to defend their case. The Tribunal found that these items were not relied upon for the APC fixation for 1999-2000. The documents related to the visit on 30-4-1999 were relevant to the offence case, not the APC fixation. The Tribunal concluded that the absence of these documents did not affect the appellants' rights, and the principles of natural justice were not violated. 4. Confiscation of Seized Fabrics and Imposition of Penalties: The Tribunal examined the seizure of excess fabrics during the visit on 30-4-1999. The appellants had not disputed the panchnama or the statement of the proprietor admitting the excess stock. The Tribunal found that the methodology adopted for the search and the results were correct. The confiscation of fabrics and the fine in lieu of confiscation were upheld. However, the confiscation of land, building, plant, and machinery was set aside, considering the gravity of the offence limited to excess stock of fabrics. 5. Appeal by Revenue Against the Order of Commissioner (Appeals) Dated 12-9-2003: The Tribunal found that the order of the Commissioner (Appeals) setting aside the inclusion of drying range cylinders was incorrect. The matter was remanded to the Original Adjudicating Authority to reconsider the issue in light of the Tribunal's observations and the final outcome of the fixation of APC by the Deputy Commissioner for the year 2000-2001. Conclusion: 1. The APC fixed for the year 1999-2000 by the Commissioner is upheld. 2. The revision of APC fixed for the year 1998-1999 is set aside. 3. Penalties imposed under Rule 96ZQ are set aside. 4. Confiscation of 50,401 linear meters of processed manmade fabrics and the fine in lieu of confiscation are upheld. 5. Confiscation of land, building, plant, and machinery is set aside. 6. The appeal filed by the Revenue is allowed, and the matter is remanded to the Original Adjudicating Authority for a fresh decision.
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