9911796707
TMI Blog2013 (7) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to refer the aforesaid question for the opinion of this Court, and in pursuance thereof the respondents have filed reply. Facts giving rise to this reference case are that respondent no.1 M/s Arvind Refractories Private Limited, F-629, RIICO Industrial Areas, Bhiwadi , District Alwar , (hereinafter shall be referred to as 'the assessee ') is engaged in manufacturing of nonalloys M.S. Ingots falling under the Central Excise Tariff Heading No.7206.90 . In terms of the provisions of Section 3A of the Central Excise Act, 1944 (for short, 'the Act of 1944') and Rule 96ZO of the Central Excise Rules, 1944 (for short, 'the Rules of 1944'), the central excise duty is chargeable on the goods manufactured by the assessee on the basis of annual capacity of production induction furnace. The annual capacity of production, which is based on total capacity of furnace, is determined in terms of Induction Furnace Annual Capacity Determination Rules, 1997 (for short, 'the Rules of 1997'). The assessee vide letter dated 18.08.1997 declared that they were having one furnace of ABB Type ITM4 /1500. They also furnished copy of certificate issued by M/s ABB dated 12.08.1997, in support of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement dated 25.10.1999 for induction furnace ITM -4/15 KW of crucible capacity 3390 KG, would hold good for the assessee also. Shri Tushar Mewar , Senior Marketing Manager of Power Generation Segment of M/s. ABB Limited, in his statement dated 20.07.1999, admitted that capacity of furnace mentioned in "Technical Data" (3390 KG) corresponds to melting of steel scrap as charge material. He further stated that capacity mentioned in the certificates corresponded to melting of sponge iron as a component of charge material along-with scrap, that the sponge iron melting generated more slag and had averse effect on the lining of crucible; that sponge iron melting could result into liquid metal overflow due to "carbon boil". This statement was also relied upon, the same being in respect of all furnace of type ITM -4/1500 KW manufactured and supplied by the same manufacturer. According to the revenue, the verification done by the anti-evasion and report of national Institute of Secondary Steel Technology, Mandi Govindgarh , cannot be considered as a acceptable proof because both of these were not the document prescribed under Rule 3 of the Rules of 1997. Moreover, verification done by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2.51 to 3.0 MT for melting sponge iron as a component of charge material alongwith scrap was issued by the manufacturer after installation of furnace. It appears that those certificates were issued by the manufacturer in total disregard of the actual capacity of the furnace and were relevant only when the sponge was made as a component charge. Since the said certificate did not specify the percentage of sponge iron to be used as a charge component and further there was no evidence regarding use of sponge iron as a component in predominance, the said certificate was not relevant and was misleading for the purpose of determining the total capacity of the furnace. Since the assessee , vide letter dated 01.09.1997, had opted to work under Rule 96ZO (3) of the Rules of 1944, they were paying central excise duty at the rate of Rs.5,00,000 /- per month on the basis of capacity of the furnace. However, since the rated capacity of the furnace was actually 3.390 MT they were required to pay central excise duty of Rs.5,65,000 /- per month on non pro-rate basis. It is contended that the assessee evaded central excise duty amounting to Rs.4,55,000 /- during 1997-98, Rs.7,80,000 /- during 1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted about capacity of furnace being 2.5 MT to 3.0 MT for melting was also produced. It was denied that there was any intentional or willful suppression or mislead by assessee with a view of evading tax. The allegation of willful suppression or mislead is totally false. Shri N.K . Goyal , learned counsel for assessee , in support of his arguments, relied on the judgments of CEGAT in Tarun Castings Private Limited Vs. Commissioner of Central Excise, Jaipur - 2002 (142) ELT 400 (Del.), Pooja Castings Private Limited Vs. Commissioner of C. Ex., Jaipur-I - 2004 (163) ELT 356 (Del.) and CESTAT in Commissioner of Central Excise, Ahmadabad Vs. Jai Ambe Textiles - 2010 (252) ELT 142 ( Ahmd .) and that of Supreme Court in Union of India Vs. K.M . Shankarappa - 2001 (127) ELT 8 (SC) . We have given our anxious consideration to rival submissions and perused the material on record. The question that calls for consideration by this court is whether Central Excise Commissioner has the power to redetermine annual capacity of production. In other words, can the Commissioner redetermine annual capacity of production induction furnace/crucible installed in the factory premise of the assessee by en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., hence the extended period has rightly been invoked for recovery of duty short paid in the case. The case laws cited by the assessee are quite distinguishable from the facts of the present case and are of no help to the assessee . Now I come to the issue of determination of total capacity of the subject furnace installed in the factory premises of the assessee on the basis of supporting documents and circumstances of the case I find that certificate of National Institute of Technology is irrelevant as sufficient material facts of the case are available on record which prove the TCF as 3.390 MT. Further no relevancy can be given to certificate issued by National Institute of Technology as they have no authority from the department. On examination of statement dt. 25.10.99 of Shri J.S . Rao , DGM M/s. ABB Ltd., statement dt. 20.7.99 of Shri Tushar Mewar , Sr. Marketing Mgr., Power General Segment M/s. ABB Ltd. copy of contract available on record and relied upon documents of the subject show cause notice I find that TCF is 3.390 MT which have been suppressed by the assessee willfully, intentionally to evade Central Excise duty. Thus total capacity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd billets of non-alloy steel in respect of such factory shall be determined by applying the formula given in the said Rule. That would mean that if the formula is applied to wrong information furnished by the assessee , it will result in incorrect annual capacity of production being determined. The Commissioner in the present case was justified in making redetermination because he round additional and further evidence which substantiated his belief that earlier determination was based on concealment of facts or at-least incorrect capacity of furnace provided by the assessee . While the assessee provided the information for being assessed on the basis of certificate from manufacturer about the capacity of furnace to be 2.5 MT to 3.0 MT for melting on that basis annual capacity production was determined provisionally on 9600 TCF vide letter dated 29.09.1997 and it was finalized as such vide letter dated 25.09.1998 but during investigation by Anti-Evasion, a copy of contract between the assessee unit and manufacturer was obtained through the Directorate General of the Central Excise Intelligence (erstwhile DGAE ) from the record under their possession. Technical data of this contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the Act, not only for reason of installation of additional furnace or technical upgradation etc. but this can also happen due to discovery of additional and further information proving that an incorrect factor was earlier made basis for determination of production capacity. Section 11A of the Act of 1944 specifically confers powers on the Central Excise Officer to determine duty where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. In terms of subrule (2) of Rule 3 of the Rules of 1997, the Commissioner may, if he so desires, consult any technical authority to determine the annual capacity of factory in which the goods should manufacture, and that Rule does not create any bar for redetermination of such a capacity, if it is shown that specification made available by the assessee was incorrect. If correct datas , correct information and specification have by any source whatsoever la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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