1995 (3) TMI 230 - AT - Central Excise

Summary

Issues:
Determining installed capacity for availing excise duty exemption under Notification No. 128/77 - Calculation based on production exceeding 2000 MT per annum - Interpretation of installed capacity - Barred by limitation under Section 11A.

Analysis:
The case involved a dispute regarding the determination of installed capacity for availing excise duty exemption under Notification No. 128/77. The respondents, engaged in paper manufacturing, claimed exemption at 75% of the duty leviable based on an installed capacity not exceeding 2000 MT per year. The issue arose when the Range Superintendent found production exceeding 2000 MT per annum, leading to a demand for differential duty. The Assistant Collector confirmed the demand, stating that production capacity cannot be less than installed capacity, thus entitling the respondents to a lower exemption rate as per the notification.

The lower Appellate Authority disagreed with the Assistant Collector's approach, citing the Tribunal's decision in a similar case and certificates indicating a lower installed capacity. The Authority held that the demand was time-barred under Section 11A due to no allegations of fraud or suppression. The Revenue appealed the decision, arguing that the production capacity was indeed over 2000 MT per annum based on actual production figures.

Upon review, the Tribunal analyzed the definition of "annual installed capacity" and relevant circulars clarifying the concept. It noted that installed capacity should be based on the machinery's designed capacity for sustained production, not merely the maximum production in specific months. Referring to previous clarifications by the Central Board of Excise & Customs, the Tribunal emphasized the distinction between installed capacity and working capacity.

Ultimately, the Tribunal upheld the lower Appellate Authority's decision, concluding that the Assistant Collector's calculation of production capacity was not sustainable. The Tribunal found no reason to interfere and rejected the Revenue's appeal, emphasizing the importance of determining installed capacity accurately for excise duty exemption eligibility.

This judgment clarifies the interpretation of installed capacity for excise duty exemption purposes, highlighting the significance of considering designed machinery capacity over actual production figures. It underscores the need for consistency in determining installed capacity and upholding the principles outlined in relevant circulars and government clarifications.