2006 (7) TMI 564 - AT - Central Excise

Tribunal rules in favor of assessee on duty dispute, emphasizing power supply limitations

COMMISSIONER OF C. EX., HYDERABAD-IV Versus DR. METAL INDUSTRIES

The Tribunal ruled in favor of the assessee, holding that duty payable was justified for only one of the two cold rolling machines installed due to power ... Production capacity based duty - Duty liability - Computation of Issues:1. Duty payable on two cold rolling machines installed by the assessee.2. Imposition of penalty on the company and the authorized signatory.3. Challenge by Revenue regarding duty computation based on the number of machines installed.4. Acceptance of evidence by the appellate authority.5. Production figures and duty liability computation.Analysis:1. The appeals arose from Orders-in-Appeal confirming demands on duty payable for two cold rolling machines installed by the assessee. The Commissioner accepted the evidence showing that only one machine could function at a time due to power supply limitations. The certificate from the Assistant Engineer clarified that simultaneous usage of both machines would cause overload. The Commissioner concluded that demanding duty on both machines was unfair as only one could operate at a time, justifying payment on one machine only.2. The imposition of penalty on the company and the authorized signatory was based on the duty demands for both machines. However, since it was established that only one machine could function due to power constraints, the Tribunal found the penalty imposition unjustified. The impugned order by the Assistant Commissioner was set aside, and the appeals were allowed.3. The Revenue challenged the order, arguing that duty computation should be based on the number of machines installed, irrespective of simultaneous operation. The Tribunal noted the Notification but emphasized that the duty liability should consider practical constraints like power supply and actual production capacity. The Commissioner's finding on duty computation aligned with the evidence presented and was upheld by the Tribunal.4. The appellate authority accepted fresh evidence, including the certificate from the Government authority and the power supply distribution letter, which supported the assessee's contention of power limitations. As the Revenue did not challenge this evidence, the Tribunal upheld the impugned order based on the accepted evidence and the Commissioner's finding on production figures.5. The production figures were crucial in determining duty liability, as they reflected the actual capacity utilized due to power constraints. The Tribunal rejected the Revenue's argument of mis-declaration, emphasizing that the production tally aligned with the operation of one machine at a time. The order passed based on the evidence and production figures was deemed legal and proper, leading to the rejection of the Revenue's challenge and the dismissal of all appeals.