1999 (6) TMI 190 - AT - Central Excise

Summary

Issues:
Stay application for full waiver and stay from pre-deposit of duty, interest, and penalty; Determination of annual capacity of induction furnace under Section 3A; Mis-declaration of capacity; Interpretation of Annual Capacity Determination Rules; Power of Commissioner to re-determine capacity; Prima facie case on merits.

Analysis:

The judgment involves a stay application seeking full waiver and stay from pre-deposit of duty, interest, and penalty. The issue primarily revolves around the determination of the annual capacity of an induction furnace under Section 3A of the Act. The Commissioner had initially fixed the capacity at 2.50 MTs based on authenticated invoices and technical consultation with a Chartered Engineer. However, a subsequent visit revealed higher production capacity, leading to a show-cause notice for re-fixing the capacity based on alleged mis-declaration.

The learned Advocate argued that the Commissioner's attempt to re-determine the capacity was based on conjecture and went beyond the scope of the show-cause notice. The rules mandate capacity determination based on invoices, with provision for reevaluation only in specific circumstances, which were not met in this case. The Commissioner's authority to re-determine the capacity suo moto was questioned, as it lacked legal basis.

The Tribunal found merit in the Advocate's submissions, emphasizing the distinction between deemed capacity and actual capacity under Section 3A. The rules required the Commissioner to rely on authenticated invoices for capacity determination unless doubts arose about their authenticity. In the absence of statutory provisions empowering re-determination of capacity based on subsequent production trials, the Tribunal upheld the Advocate's arguments.

Consequently, the Tribunal granted full waiver of pre-deposit and stay from recovery during the appeal, acknowledging the strong prima facie case on merits presented by the applicant. The importance of early hearing due to significant revenue implications was recognized, leading to the appeal being listed for an expedited hearing on 14th September 1999. The judgment highlights the legal intricacies surrounding capacity determination, mis-declaration allegations, and the Commissioner's authority in re-assessing capacity, providing clarity on the applicable rules and principles governing such matters.