2008 (1) TMI 810 - AT - Central Excise

Tribunal adjusts duty payment date, penalty waived due to delayed communication

The Tribunal determined that the change in installed machinery parameters for duty payment should be effective one month from the date of the appellants' ... Production capacity based duty Issues:Determining effective date of change in installed machinery parameters for duty payment under Central Excise Act, 1944.Analysis:The case involved the appellants engaged in manufacturing MS Bars, Flats, and Angles, paying duty under Section 3A of the Central Excise Act, 1944. The issue arose when the Commissioner of Central Excise refixed the parameters of the installed capacity and directed the appellants to pay duty from a specific date. The Adjudicating Authority confirmed the demand of duty short paid during a specific period, along with interest and penalty, which was upheld by the Commissioner (Appeals). The crux of the matter was the interpretation of para 4(2) of Notification No. 32/97-C.E. (N.T.), dated 1-8-97, which required manufacturers to intimate the Commissioner of Central Excise about proposed changes in machinery parameters and obtain approval before making such changes.Upon perusal of the records and relevant notification, it was noted that the appellants had intimated the Department about the proposed changes in installed capacity and discharge of duty liability, with production starting from a specific date. However, the Assistant Commissioner's letter directing duty liability discharge was delayed, creating ambiguity about the effective date of the parameter change. The Tribunal's precedent in Kanishk Steel Industries Ltd. v. CCE, Chennai was cited, emphasizing that the change specified by the assessee in their letter for parameter change should be considered the relevant date. The notification mandated communication at least one month in advance of the proposed change, which was not adhered to in this case.The Tribunal concluded that the change in parameters should be effective after completing one month from the date of the proposed letter, setting the effective date as 12-10-97 instead of 1-12-97. Given the interpretation of the law and the absence of fault on the appellant's part, the imposition of penalty was deemed unwarranted and set aside. The appeal was disposed of accordingly, highlighting the importance of clear communication and adherence to procedural requirements in such matters.