UNION ENTERPRISES Vs. CCE

JUDGEMENT

(1.) This appeal is directed againt the order in original No. 90 -92 dated 23.11.2000 passed by the Commissioner of Central Excise, Jamshedpur, by which the Commissioner has re -determined the Annual Production Capacity (ACP for short) in the case of Furnance installed in the factory of the assessee as 11520 MT in terms of provisions of Sub -rule 1 of Rule 3 of induction Furnance Annual Capacity determination Rule 97 with effect from 1.9.1997 which was fixed at 9600 MT earlier vide order dated 23.3.1998. The Commissioner has also confirmed a demand of Rs. 29,00,000/ - as duty short paid by the assessee for the period from 9/97 to 1/2000 under Section 11A of the CEA 1944, apart from imposing penalty of equal amount in terms of Rule 96ZO of the CER 1944. He has directed the Deputy Commissioner to determine the amount of interest @ 18% payable and communicate to the assessee in terms of Rule 96ZO(3) and directed the assessee to pay the amount determined.

(2.) The brief facts of the case are that the assessee are manufacturers of MS Ingots/Billets, hereinafter referred to as goods, falling under Chapter sub -heading 7206.90 of the CETA the, goods were liable to duty in terms of the provisions of Section 3A of the CEA 1944 based on Annual Capacity of Production (ACP) in the manner as prescribed under the provision of Rule 96ZO of the CER. The manner in which the aforesaid ACP is to be determined by the Commissioner is set out in Sub -rule 1 of Rule 3 of the Induction Furnance Annual Capacity Determination Rules 1997, hereinafter referred to as the said Rules. Accordingly based on the declaration dated 11.9.1997 filed by the appellants which was supported by a certificate dated 30.8.1997 of the supplier, the commissioner, Central Excise, 30.8.1997 of the supplier, the Commissioner, Central Excise, Jamshedpur vide his order dated 23.3.1998 finally fixed the ACP of the furnace of the assessee as 9600 MT. Since the assessee opted vide their letter dated 11.9.1997 for payment of duty on the goods under the provisions of Sub -rule 3 of the Rule 96ZO of the CER 1944, the assessee was required to pay duty @ Rs. 5,00,000/ - only per month. Inasmuch as the fixation of ACP done was on the declaration of the assessee as well as certificate dated 30.8.1997 of the supplier, the Commissioner in terms of the provisions of Sub -rule 2 of Rule 3 of the said Rule, expert opinion was sought for from the National Metallurgical Laboratory, (NML for short) and the NML gave their expert opinion whereby the capacity of the furnace was calculated as 3.4 MT and ACP as 10880 MT in the case of the induction furnace installed in the factory of the assessee. Meanwhile during the search of the factory as well as office premises of the assessee the officers recovered documents relating to the installation of the induction furnace by the assessee and the documents revealed that the capacity of the firnace installed in the factory of the assessee was 3600 Kg (Average) i.e. 3.6 MT instead of 3 MT as per the declaration given by the assessee vide letter dated 11.9.1997 as well as certified by the supplier vide their certificate dated 30.8.1997. In the circumstances a show cause notice bearing No. IV(16)193/IF/Teach/98/15744 dated 15.9.1999 was issued to the assessee inter alia alleging misdeclaration of the capacity of their furnance as 3 MT and also suppression of the actual capacity of the furnance and the SCN sought to re -determine the capacity and demanding duty short paid to the tune of Rs. 19,99,000/for the period from 9/97 to 3/99 as well as imposition of penalty apart from confiscation of land, building, machinery. The supplier was also by the same SCN asked to show cause as to why penalty should not be imposed on him. Apart from this show cause notice two more Demand cum -show cause notices were also issued to the assessee under Rule 9(2) read with Section 11A of the CE Act, 1944 as under:

(3.) After considering the reply furnished by the assessee, after granting personal hearing the matter was adjudicated by the Commissioner by which the impugned order has been passed as noted in para 1 above.