Appellate Tribunal Upholds Duty Reduction & Penalty Set Aside for Steel Rolling Mills

COMMISSIONER OF C. EX., CHANDIGARH Versus SURINDRA STEEL ROLLING MILLS

COMMISSIONER OF C. EX., CHANDIGARH Versus SURINDRA STEEL ROLLING MILLS - 2004 (178) E.L.T. 444 (Tri. - Del.) Issues:
- Reduction of demand of duty against M/s. Surindra Steel Rolling Mills
- Setting aside of penalty imposed on M/s. Surindra Steel Rolling Mills
- Benefit of Notification No. 67/95-C.E. availed by M/s. Surindra Steel Rolling Mills
- Determination of quantity of ingots consumed by M/s. Surindra Steel Rolling Mills
- Proportionate consumption principle applied by the Commissioner (Appeals)
- Appeal by the Revenue against the Order-in-Appeal No. 771/2003
- Cross-objection filed by M/s. Surindra Steel Rolling Mills

Analysis:

The appeal before the Appellate Tribunal CESTAT, New Delhi was filed by the Revenue against the Order-in-Appeal No. 771/2003, where the Commissioner (Appeals) had reduced the demand of duty against M/s. Surindra Steel Rolling Mills and set aside the penalty imposed on them. The case involved the application of the Compounded Levy Scheme effective from 1-9-97, with M/s. Surindra Steel Rolling Mills opting for duty liability discharge. The dispute arose regarding the quantity of steel ingots consumed by the company, with the Revenue contending that proper records were not maintained to establish the consumption. The Commissioner (Appeals) determined the consumed quantity based on a pro rata basis, leading to a demand of Central Excise duty. The Revenue argued against this approach, emphasizing the lack of actual consumption records, while M/s. Surindra Steel Rolling Mills contended that all ingots were captively consumed in their rolling mills division.

The Tribunal considered the arguments from both sides and noted the inability of either party to accurately determine the quantity of ingots consumed by M/s. Surindra Steel Rolling Mills. In light of this uncertainty, the principle of proportionate consumption adopted by the Commissioner (Appeals) was deemed appropriate. Consequently, the Tribunal upheld the impugned Order, rejecting the appeal filed by the Revenue. Additionally, the Tribunal dismissed the cross-objection by M/s. Surindra Steel Rolling Mills, highlighting their own acknowledgment of the pro rata basis for calculating ingot consumption in a letter to the Adjudicating Authority. The decision affirmed the duty demand based on the consumption formula and emphasized the necessity for maintaining accurate records to avoid such disputes in the future.