CCE, CHANDIGARH Vs. D.K. ALLOYS, LUDHIANA

JUDGEMENT

(1.) The respondent in this appeal, manufactures of hot Re -rolled products of non -ally steel, were working during the relevant period under the Compounded Levy Scheme under Rule 96ZP of the Central Excise Rules read with Section 3A ofthe Central Excise Act. Under the Scheme, they were required to discharge duty liability on their final products on the basis of the Annual Capacity of Production (ACP) of their mill as determined under the provisions of the Hot Re -rolling Steel Mills Annual Capacity Determination Rules, 1997 (in short, ACP Rules). The appellants declared the various parameters of the mill to the jurisdictional Commissioner of Central Excise in terms of Rule 3(1) of the ACP Rules on 11.09.1997. On that basis, their ACP was provisionally determined at 8204.082 MT per annum by the Commissioner. Subsequently, the officers of Central Excise visited the appellant's factory and conducted a verification of the parameters. The verification disclosed the value of one of he parameters, namely "d" (nominal centre distance between the pinions of the pension stand connecting the last rolling mill drive of the finishing mill) as 264 mm as against 260 mm declared by the party. On the basis of the report of verification, the Commissioner finally determined the Annual Production Capacity in terms of the ACP Rules, for which he adopted the figure of 264 mm as the value of "d". The final Annual Production Capacity so determined was 11,144.580 MT. The capacity per annum short -determined amounted to 2940.490 MT, being the difference between the afore said values of provisional capacity and final capacity. The respondents accepted the final capacity determined by the Commissioner and made up the short payment of duty accordingly. The Department, however, framed a case of misdeclaration against the appellants and issued show -cause notice (SCN) to them on 30.03.1999 for recovering interest on the duty (paid as above) under Section 11AB of the Act and imposing mandatory penalty on the appellants under Section 11AC of the Act, in addition to penalty under Rules 9(2) and 173Q of the Central Excise Rules. For the purpose of mandatory penalty, the Department, in the SCN, alleged that the appellants had "misdeclared the "d" factor and suppressed facts from the knowledge of the Department". The notice was contested by the party and the dispute was adjudicated upon by the Additional Commissioner who imposed mandatory penalty of Rs.5,15,000.00 on the respondents under Section 11AC and ordered recovery of interest @ 20% under Section 11AB, apart from regularising the payment of duty already made by the party. The appeal filed against the order of adjudication was allowed by the Commissioner (Appeals). The Department has filed the present appeal against the order of the lower appellate authority.

(2.) Perused the records and heard both sides.

(3.) Ld. JDR Shri J. Singh submits that the respondents had misdeclared the "d" factor in their letter dated 11.09.1997 and that such misdeclaration was acknowledged by them at the time of verification of parameters by the officers on 21.12.1998. Ld. JDR further submits that the Annual Capacity of Production determined by the Commissioner on the basis of the correct value "d" ascertained by the officers was also accepted by the appellants and, on that basis, they paid duty also. The allegation of misdeclaration and suppression levelled against the respondents in the SCN had gone unrebutted and, therefore, the provisions of Sections 11AC and 11AB of the Central Excise Act were rightly invoked by the adjudicating authority. Ld. JDR further submits that ld. Commissioner (Appeals) did not consider the question of liveability of interest under Section 11AB of the Act. He, therefore, prays for setting aside the impugned order and restoring the order of the original authority.