2000 (11) TMI 365 - AT - Central Excise

Summary

Issues:
Determining duty liability in case of manufacturing unit's production fall due to breakdown.

Analysis:
The case involved an appeal regarding the authority of an assessee to pay duty calculated pro-rata in case of a manufacturing unit's production fall due to a breakdown. The appellant, a re-rolling mill, opted to discharge duty liability under sub-rule (3) of Rule 96ZP. The Department provisionally fixed the Annual Production Capacity and duty payable per month. However, a breakdown in the mill led to non-production of rolled products, resulting in a dispute over duty payment for the period of closure. The appellant argued that duty should be reduced pro-rata due to the change in production capacity caused by the breakdown.

The appellant filed a Misc. application to add a ground stating that duty liability should be reduced pro-rata as per the third proviso to sub-rule (3) of Rule 96ZP. The Tribunal allowed the application, considering it a point of law that could be raised at any stage. The appellant contended that the duty should be calculated pro-rata as the production fell to zero, indicating a change in the re-rolling capacity installed.

The Tribunal considered the provisions of proviso 3 to sub-rule (3) of Rule 96ZP, which require payment on a pro-rata basis in case of a change in re-rolling capacity. The appellant argued that the decrease in production constituted a change in capacity. However, the Department argued that the re-rolling capacity remained the same, only the production fell. The Tribunal concluded that a change in production does not equate to a change in capacity, emphasizing that capacity refers to a fixed amount that can be produced. Despite the production coming to zero due to the breakdown, the capacity of the mill remained unchanged.

Based on the above analysis, the Tribunal found no merit in the appeal and rejected it, upholding the decision that duty liability cannot be reduced pro-rata solely based on a decrease in production due to a breakdown, as capacity and production are distinct concepts in determining duty payments.