Vinayaka Alloys (P) Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. these are two applications before us in appeal no. e/521 /2003, one by the assessee seeking waiver of pre-deposit and stay of recovery in respect of an amount of duty of over rs. 85,00,000 (rupees eighty five lakhs) and an equal amount of penalty and the other application filed by the revenue seeking early disposed of the appeal.2. the appellants are manufacturers of m.s. ingots falling under chapter 72 of the schedule to the ceta, 1985. during the material period, they were working under the compounded levy scheme. they had to discharge duty liability as fixed by the jurisdictional commissioner under rule 3 of the induction furnace annual capacity determination rules, 1997 (hereinafter referred to as ifacd rules). the appellants had two units covered by a single central excise registration. unit 1 had a furnace of 3 ton crucible capacity and unit 2 had a furnace of 4.5 to 5 ton crucible capacity. it appears from the records that, on the basis of the declaration of furnace parameters given by the party on 1.8.97, the commissioner fixed the annual capacity of production (acp) of the factory and the same was communicated to the party by assistant commissioner. meanwhile, the party was paying duty on the basis of acp determined and duty quantified by themselves. in their self-determination of acp, they had excluded the period of non-operation of one of the furnaces. while the assessee went on paying duty on such basis, the department issued demand notices based on the acp communicated by the assistant commissioner. these show-cause notices came to be adjudicated upon by the commissioner, who confirmed a demand of about rs. 59.7 lakhs against the party out of the total demand of rs. 3 crores raised in the show-cause notices. this tribunal had occasion to consider the assessee's appeal against the above decision of the commissioner and, having found negation of natural justice to the party, we remanded the case for de novo adjudication.the subsequent order passed by the commissioner in the remanded proceedings is now under challenge. it has confirmed demand of duty to the extent of about rs. 85.7 lakhs against the appellants. the impugned order has also imposed a penalty of equal amount on the assessee.3. we have heard both sides. it appears from the records and the submissions that ld. commissioner has not taken into account the periods of closure of the furnaces. one of the furnaces was not in operation from 24.7.95 to 7.3.98 and the other remained closed down from 23.1.98 to 31.3.2000. ld. commissioner determined the acp of the factory in the same manner as his predecessor-in-office had determined it earlier. the acp so determined is based on a premise that, irrespective of operation or non-operation of any of the furnaces, acp depends on "capability" of furnaces. ld. commissioner assumed that both the furnaces were "capable" of producing m.s. ingots during the entire period. this view prima facie does not stand the test of decisions of this tribunal. one of the decisions cited by the counsel is the one rendered by this tribunal in the case of didar steel complex p. ltd. v.cce, 2003 (54) rlt 537 (cegat-del). in the cited case, rule 4 of ifacd rules had arisen for consideration. the bench held that it was not the factum of installation of furnace per se but the question whether the furnace was operational or not that was relevant to rule 4 ibid. the tribunal, accordingly, ordered re-determination of acp with effect from the date on which one of the furnaces of the assessee had become non-functional. the facts of the instant case are substantially similar to those of didar steel complex p. ltd. (supra). the challenge in the present appeal is also based on rule 4 ibid as understood by this tribunal in the case of didar steel complex p. ltd. (supra). we have also heard ld. sdr, who has perused the tribunal's order relied on by the counsel.4. the appellants have made out a strong prima facie case on the strength of rule 4 ibid as well as the tribunal's decision in didar steel complex p ltd. (supra). waiver of pre-deposit and stay of recovery are, therefore, allowed in respect of the duty and penalty amounts. ld. sdr has pressed the remaining application for early disposal of the appeal, which is not opposed. as the stake involved in this case is high, we are inclined to accede to this request. the appeal is posted to 4.10.04.5. the next application before us is also one filed by the revenue, which seeks early disposal of appeal no. e/418/2002. this appeal filed by the department against the earlier order of the commissioner, which we have already referred to. it was in that order that the commissioner had confirmed demand of duty to the extent of rs. 59.7 lacs against m/s. vinayaka alloys ltd. the demand so confirmed was out of an aggregate demand of over rs.3 crores raised in the show-cause notices issued by the department. the department, in this appeal, is aggrieved by slashing of the demand of duty to rs. 59.7 lakhs. according to them, the demand should not have been less than rs. 85,76,947. we have noticed that, in the second round of adjudication pursuant to the tribunal's remand order, the commissioner worked out the demand precisely as rs. 85,76,947. the revenue has not filed any appeal against the order passed by the commissioner in the remanded proceedings. their grievance stands redressed. the challenge in their appeal no. e/418/2002 does not survive. even otherwise, by virtue of the remand order which we passed in the appeal preferred by the assessee against the first order of the commissioner, the present appeal of the revenue is not maintainable. this appeal is dismissed.

Judgment:
1. These are two applications before us in Appeal No. E/521 /2003, one by the assessee seeking waiver of pre-deposit and stay of recovery in respect of an amount of duty of over Rs. 85,00,000 (Rupees eighty five lakhs) and an equal amount of penalty and the other application filed by the Revenue seeking early disposed of the appeal.

2. The appellants are manufacturers of M.S. Ingots falling under Chapter 72 of the Schedule to the CETA, 1985. During the material period, they were working under the compounded levy scheme. They had to discharge duty liability as fixed by the jurisdictional Commissioner under Rule 3 of the Induction Furnace Annual Capacity Determination Rules, 1997 (hereinafter referred to as IFACD Rules). The appellants had two units covered by a single Central Excise registration. Unit 1 had a furnace of 3 ton crucible capacity and unit 2 had a furnace of 4.5 to 5 ton crucible capacity. It appears from the records that, on the basis of the declaration of furnace parameters given by the party on 1.8.97, the Commissioner fixed the annual capacity of production (ACP) of the factory and the same was communicated to the party by Assistant Commissioner. Meanwhile, the party was paying duty on the basis of ACP determined and duty quantified by themselves. In their self-determination of ACP, they had excluded the period of non-operation of one of the furnaces. While the assessee went on paying duty on such basis, the department issued demand notices based on the ACP communicated by the Assistant Commissioner. These show-cause notices came to be adjudicated upon by the Commissioner, who confirmed a demand of about Rs. 59.7 lakhs against the party out of the total demand of Rs. 3 crores raised in the Show-cause notices. This Tribunal had occasion to consider the assessee's appeal against the above decision of the Commissioner and, having found negation of natural justice to the party, we remanded the case for de novo adjudication.

The subsequent order passed by the Commissioner in the remanded proceedings is now under challenge. It has confirmed demand of duty to the extent of about Rs. 85.7 lakhs against the appellants. The impugned order has also imposed a penalty of equal amount on the assessee.

3. We have heard both sides. It appears from the records and the submissions that Ld. Commissioner has not taken into account the periods of closure of the furnaces. One of the furnaces was not in operation from 24.7.95 to 7.3.98 and the other remained closed down from 23.1.98 to 31.3.2000. Ld. Commissioner determined the ACP of the factory in the same manner as his predecessor-in-office had determined it earlier. The ACP so determined is based on a premise that, irrespective of operation or non-operation of any of the furnaces, ACP depends on "capability" of furnaces. Ld. Commissioner assumed that both the furnaces were "capable" of producing M.S. Ingots during the entire period. This view prima facie does not stand the test of decisions of this Tribunal. One of the decisions cited by the Counsel is the one rendered by this Tribunal in the case of Didar Steel Complex P. Ltd. v.CCE, 2003 (54) RLT 537 (CEGAT-Del). In the cited case, Rule 4 of IFACD Rules had arisen for consideration. The Bench held that it was not the factum of installation of furnace per se but the question whether the furnace was operational or not that was relevant to Rule 4 ibid. The Tribunal, accordingly, ordered re-determination of ACP with effect from the date on which one of the furnaces of the assessee had become non-functional. The facts of the instant case are substantially similar to those of Didar Steel Complex P. Ltd. (supra). The challenge in the present appeal is also based on Rule 4 ibid as understood by this Tribunal in the case of Didar Steel Complex P. Ltd. (supra). We have also heard Ld. SDR, who has perused the Tribunal's order relied on by the Counsel.

4. The appellants have made out a strong prima facie case on the strength of Rule 4 ibid as well as the Tribunal's decision in Didar Steel Complex P Ltd. (supra). Waiver of pre-deposit and stay of recovery are, therefore, allowed in respect of the duty and penalty amounts. Ld. SDR has pressed the remaining application for early disposal of the appeal, which is not opposed. As the stake involved in this case is high, we are inclined to accede to this request. The appeal is posted to 4.10.04.

5. The next application before us is also one filed by the Revenue, which seeks early disposal of Appeal No. E/418/2002. This appeal filed by the department against the earlier order of the Commissioner, which we have already referred to. It was in that order that the Commissioner had confirmed demand of duty to the extent of Rs. 59.7 lacs against M/s. Vinayaka Alloys Ltd. The demand so confirmed was out of an aggregate demand of over Rs.3 crores raised in the Show-cause notices issued by the department. The department, in this appeal, is aggrieved by slashing of the demand of duty to Rs. 59.7 lakhs. According to them, the demand should not have been less than Rs. 85,76,947. We have noticed that, in the second round of adjudication pursuant to the Tribunal's remand order, the Commissioner worked out the demand precisely as Rs. 85,76,947. The Revenue has not filed any appeal against the order passed by the Commissioner in the remanded proceedings. Their grievance stands redressed. The challenge in their Appeal No. E/418/2002 does not survive. Even otherwise, by virtue of the remand order which we passed in the appeal preferred by the assessee against the first order of the Commissioner, the present appeal of the Revenue is not maintainable. This appeal is dismissed.