2009 (7) TMI 1004 - AT - Central Excise

Appeal to Appellate Tribunal - Adjournment of hearing - Production capacity based duty - Penalty - Personal penalty

Summary

Issues:
1. Request for adjournment based on High Court orders.
2. Determination of production capacity under Compounded Levy Scheme.
3. Alleged use of higher capacity crucibles and subsequent duty demand.
4. Applicability of Section 38A post omission of Section 3A.
5. Role and penalty imposition on the company's Director.

Issue 1: Request for Adjournment
The appellants sought an adjournment based on a Madras High Court order staying proceedings under Section 3A and Rule 96ZP. However, the DR opposed, citing a Punjab and Haryana High Court decision holding that the omission of Section 3A does not absolve the assessee's liability. Despite multiple adjournments earlier, the Tribunal declined further adjournment due to the finality of the jurisdictional High Court's decision.

Issue 2: Production Capacity Determination
The appellants, a non-alloy steel ingots manufacturer, under-declared their crucible capacities under the Compounded Levy Scheme. The Commissioner found four crucibles of higher capacities installed before the scheme's commencement, leading to an increased annual production capacity determination and a subsequent demand for differential duty, interest, and penalties.

Issue 3: Alleged Use of Higher Capacity Crucibles
The appellants claimed the higher capacity crucibles were kept as standbys and used sparingly. However, evidence, including log sheets and employee statements, indicated regular use of higher capacity crucibles. The Tribunal found the Commissioner's decision to enhance the annual capacity and impose the duty demand justified based on overwhelming evidence.

Issue 4: Applicability of Section 38A
The Tribunal referred to the Punjab and Haryana High Court decision and a Tribunal's Larger Bench ruling, emphasizing Section 38A's applicability post the omission of Section 3A. Section 38A ensures that liabilities incurred under omitted sections remain valid, supporting the duty demand in this case.

Issue 5: Role and Penalty Imposition on Director
The Commissioner's detailed findings supported the Director's intentional suppression of crucial information regarding higher capacity crucibles. As the Director was responsible for the company's affairs and misled the authorities, the Tribunal upheld the penalty imposed on him.

In conclusion, the Tribunal upheld the Commissioner's order, rejecting the appellants' appeals based on the findings related to production capacity determination, use of higher capacity crucibles, and the Director's role in the non-disclosure of crucial information. The legal principles of liability post-omission of sections were crucial in justifying the duty demand and penalties imposed.