2012 (10) TMI 910 - AT - Central Excise

Waiver of pre-deposit - manufacture of M.S Flats and M.S. Bars - demand on the ground that the applicants was showing higher consumption of electricity and the quantum of electric consumption during the two hours trial Held that - Contention of the applicant is that under the compounded levy scheme the applicant s annual capacity was fixed at 1187 MT per annum after due verification. As per the quantification of demand in the present proceedings the annual capacity of the mill comes to 8000 M.T. per annum which is not possible. This contention is not considered by the adjudicating authority though raised - pre-deposit waived - matter is remanded to the adjudicating authority for de novo adjudication

Summary

Issues:
1. Waiver of pre-deposit of duty, interest, and penalty.
2. Suppression of production based on power consumption during trial run.
3. Denial of exemption under Notification due to crossing prescribed limit.
4. Shortage of finished goods during verification.
5. Capacity of the mill and additional capital goods.
6. Contention regarding electric consumption in the factory.
7. Admissibility of trial run conducted in the presence of panchas.

Analysis:
1. The applicant filed for the waiver of pre-deposit of duty amounting to Rs.1,63,17,206/-, interest, and penalty. The case involved the manufacturing of M.S Flats and M.S. Bars under the S.S.I exemption. The demand was based on alleged suppression of production and denial of exemption due to exceeding the prescribed limit, along with a shortage of finished goods during verification.

2. The contention of the appellant was that during the trial run, M.S Flats and M.S. Bars were manufactured, emphasizing the power consumption required for producing flats of a specific size. The demand was challenged based on the capacity of the mill and the absence of evidence for additional capacity enhancement.

3. The Revenue argued that the trial run was conducted in the presence of panchas, and the correctness of the trial was admitted by the applicant, precluding any subsequent contention regarding the trial. However, the main issue was the discrepancy in the annual production capacity of the mill, as per the compounded levy scheme and the actual calculation, which was deemed not physically possible.

4. The Tribunal found that the annual capacity of the mill was fixed at 1187 MT per annum under the compounded levy scheme, but the quantification of demand in the proceedings indicated a capacity of 8000 MT per annum, raising doubts about the validity of the demand. The adjudicating authority failed to consider this critical contention, leading to the setting aside of the impugned order and remanding the matter for reevaluation.

5. In conclusion, the Tribunal waived the pre-deposit of dues and directed the adjudicating authority to conduct a fresh adjudication after providing the appellants with an opportunity to present their case. The judgment highlighted the importance of considering all relevant factors, such as the mill's capacity and electric consumption, in determining the validity of the demand raised by the Revenue.