1990 (6) TMI 82 - AT - Central Excise

Tribunal Confirms Respondents' Capacity Under 2000 Tonnes, Dismisses Revenue Appeal, Grants 75% Duty Exemption.

COLLECTOR OF C. EX. Versus UPPER INDIA COUPER PAPER MILLS CO. LTD.

COLLECTOR OF C. EX. Versus UPPER INDIA COUPER PAPER MILLS CO. LTD. - 1991 (51) E.L.T. 471 (Tribunal) Issues Involved:1. Determination of installed capacity for concessional assessment under Notification No. 128/77.2. Validity and reliability of certificates from the Ministry of Industry and Chartered Engineer.3. Interpretation of installed capacity versus production capacity.Issue-wise Detailed Analysis:1. Determination of installed capacity for concessional assessment under Notification No. 128/77:The respondents claimed concessional assessment for paper manufactured under Notification No. 128/77, asserting their plant's installed capacity was 2000 metric tonnes per annum, qualifying them for a 75% duty exemption. The lower authority allowed only a 60% exemption, treating the capacity as over 2000 metric tonnes. The Assistant Collector ruled against the respondents based on their earlier declarations. However, the Collector (Appeals) accepted the respondents' plea, supported by a certificate from the Ministry of Industry, recognizing their capacity as 2000 metric tonnes. The Tribunal had to determine whether the installed capacity should be taken as 2000 metric tonnes or more based on the evidence presented.2. Validity and reliability of certificates from the Ministry of Industry and Chartered Engineer:The respondents relied on certificates from the Ministry of Industry and a Chartered Engineer to support their claim. The Ministry of Industry certified the production capacity as 2000 metric tonnes. The Chartered Engineer's certificate indicated a daily production capacity of 7.2 tonnes at 100% efficiency, translating to 1944 metric tonnes annually at 75% efficiency. The Tribunal noted that the Ministry of Industry's certificate was based on the respondents' request and past production figures, not the design specifications of the machinery. The Chartered Engineer's certificate lacked a basis for the efficiency rate used. The majority opinion held that the certificates should not be discarded lightly, especially given the trust placed in the DGTD by the government.3. Interpretation of installed capacity versus production capacity:The Tribunal distinguished between installed capacity and production capacity. Installed capacity refers to the maximum capacity of the machinery as designed, while production capacity reflects actual production, which may be lower due to various factors. The respondents' historical production data showed fluctuations, with production exceeding 2000 tonnes in several years. The Tribunal noted that the respondents had not provided evidence of any reduction in installed capacity from the declared 2500 tonnes in 1965. The majority opinion emphasized that the installed capacity should be taken as equivalent to the capacity recognized by the government through industrial licenses or registration, as clarified by the Ministry of Industry.Conclusion:The Tribunal, in its majority opinion, concluded that the installed capacity of the respondents' unit should be held as not exceeding 2000 metric tonnes based on the evidence produced, including the certificates from the Ministry of Industry and the Chartered Engineer. The appeal of the Revenue was dismissed, and the respondents were entitled to the benefit of Notification No. 128/77 with a 75% duty exemption.