1998 (1) TMI 176 - AT - Central Excise

Summary

Issues:
1. Whether the value of capital investment on plant and machinery exceeded the limit prescribed under Notification No. 77/85, dated 17-3-1985.
2. Whether the Automatic Resetting Device should be included for the calculation of the capital investment value.
3. Determination of the exchange rate for computing the value of the imported wire mesh welder.

Analysis:
1. The appeal concerned a duty demand of Rs. 1,90,881.36 raised by the Additional Collector of Central Excise, New Delhi, as the appellants were deemed ineligible for the benefit of Notification No. 77/85 due to the value of their plant and machinery exceeding the prescribed limit of Rs. 20 lakhs. The appellants revised their classification list in 1985, claiming exemption under the said notification, but the department disagreed based on the value of their fixed assets. A show cause notice was issued for duty recovery and penalty imposition.
2. The defense of the appellants regarding the actual value of plant and machinery and the exclusion of the Automatic Resetting Device was rejected by the Adjudicating Authority. The value of the wire mesh welder imported by the appellants was also disputed. The Tribunal found the total value of plant and machinery, including additional indigenous equipment, exceeded the prescribed limit, thus upholding the disentitlement to the notification benefit.
3. The Tribunal considered the value of capital investment, including clearing charges and indigenous equipment, to determine the eligibility for the notification benefit. The exclusion of the Automatic Resetting Device's value was denied as it did not render the machinery unfit for use, as per the explanation in the notification. The exchange rate issue was deemed irrelevant at this stage, focusing on the actual rate applied during clearance.
4. Another judge highlighted the key issues of the case, emphasizing the discrepancy between the claimed and actual value of plant and machinery, the inclusion of the non-functioning Automatic Resetting Device, and the determination of the exchange rate for the imported goods. The failure to demonstrate compliance with the notification's prescribed limit led to the rejection of the appeal and affirmation of the impugned order.