2004 (1) TMI 614 - AT - Central Excise

Tribunal Upholds Duty Demand, Appellant to Deposit Rs. 17 Lakh Within 6 Weeks

The Tribunal, comprising Members V.K. Agrawal and P.G. Chacko, found that the appellant failed to conclusively prove that the determination of annual ... Stay/Dispensation of pre-deposit - Annual capacity of production Issues involved:1. Waiver of pre-deposit of Central Excise duty and penalty.2. Determination of annual production capacity under Central Excise Act.3. Validity of demand for short-paid duty.4. Time limitation under Section 11A of the Central Excise Act.Detailed Analysis:1. The case involves an application by M/s. Dhiman Industries seeking a waiver of pre-deposit of Central Excise duty amounting to Rs. 37,22,706 and an equal amount of penalty. The appellant's advocate argued that the determination of their annual production capacity had been disputed, leading to the demand for duty being contested. On the other hand, the respondent's representative contended that the Tribunal did not set aside the determination of annual production capacity but remanded the matter for compliance with Section 11A of the Act.2. The appellant claimed that the Commissioner's determination of their annual production capacity was flawed and had been set aside by the Tribunal. They argued that without a valid determination of annual capacity, no demand for duty could be confirmed. However, the respondent argued that the Tribunal had not set aside the determination of annual production capacity but had remanded the matter for compliance with Section 11A of the Act.3. The key contention revolved around the validity of the demand for short-paid duty. The appellant argued that the demand was time-barred under Section 11A of the Central Excise Act, as the show cause notices were issued beyond the specified time limit. Conversely, the respondent asserted that the demands were made within the prescribed time limit and were valid under Rule 96ZP(3) of the Central Excise Rules.4. The Tribunal, comprising of Members V.K. Agrawal and P.G. Chacko, analyzed the submissions from both sides. They found that the appellant had not conclusively proven that the determination of annual production capacity had been set aside by the Tribunal. Additionally, the Tribunal determined that the demand for the period from April 1998 to September 1998 was within the specified six-month period and amounted to Rs. 17,18,172. Consequently, the Tribunal directed the appellant to deposit Rs. 17 lakh within six weeks. Upon compliance, the pre-deposit of the remaining duty amount and the penalty would be waived, with recovery stayed during the appeal's pendency. The next compliance report was scheduled for March 18, 2004.