1990 (7) TMI 205 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for concessional rate of 75% duty under Notification 128/77.
2. Determination of installed capacity exceeding 2,000 metric tonnes per annum.
3. Alleged suppression of facts and invocation of the extended period of limitation.
4. Computation of differential duty.
5. Imposition and quantum of penalty.

Detailed Analysis:

1. Eligibility for Concessional Rate of 75% Duty:
The primary issue was whether the appellants were eligible for the concessional rate of 75% duty under Notification 128/77 dated 18-6-1977, which applies if the installed capacity does not exceed 2,000 metric tonnes per annum. The appellants claimed their installed capacity was below this threshold.

2. Determination of Installed Capacity:
The appellants submitted a classification list declaring an installed capacity below 2,000 metric tonnes per annum. However, during investigations, the Central Excise Officers found that the actual installed capacity was 2,468.4 metric tonnes per annum based on various parameters like the width of Deckle, steam pressure, speed of M.G. Cylinder, and moisture content. The Collector of Central Excise held that the installed capacity exceeded 2,000 metric tonnes per annum, making the appellants ineligible for the 75% concessional duty.

The appellants presented a certificate from the Institute of Paper Technology, which estimated the installed capacity at 1,958 tonnes per annum. The Department, however, questioned the validity of this certificate due to the delay in its issuance and the timing of the request, which came after the show cause notice. The Tribunal found the Department's report more credible and concluded that the installed capacity exceeded 2,000 metric tonnes per annum.

3. Alleged Suppression of Facts and Extended Period of Limitation:
The Department alleged that the appellants suppressed the actual installed capacity to avail the concessional duty. The Collector justified the invocation of the extended period of limitation on the grounds that the appellants mis-declared their installed capacity in various applications and correspondence. The Tribunal upheld this view, noting that the appellants had declared different capacities at different times, and subsequent to Notification 128/77, they declared a lower capacity to fit within the concessional rate criteria. This amounted to suppression of facts.

4. Computation of Differential Duty:
The Tribunal remanded the issue of computing the differential duty to the Collector. The computation was to be done after deducting the amount of duty actually paid from the sale price, in accordance with Section 4(4)(d)(ii) of the Central Excise and Salt Act, 1944.

5. Imposition and Quantum of Penalty:
The Collector imposed a penalty of Rs. 25 lakhs on the appellants. The Tribunal upheld the imposition of the penalty but found the amount disproportionate to the duty demanded. The penalty was reduced to Rs. 4 lakhs, approximately 25% of the duty demanded.

Conclusion:
The appeal was dismissed with modifications. The Tribunal confirmed that the installed capacity exceeded 2,000 metric tonnes per annum, making the appellants ineligible for the 75% concessional duty. The extended period of limitation was applicable due to suppression of facts. The matter of differential duty computation was remanded to the Collector, and the penalty was reduced to Rs. 4 lakhs.