2002 (2) TMI 202 - AT - Central Excise

Tribunal Upholds Jurisdiction on Show Cause Notice & Duty Payment Adherence

The Tribunal upheld the Assistant Commissioner's jurisdiction to issue the show cause notice, rejecting the appellants' argument that it should have been ... Production capacity based duty - Demand - Limitation Issues Involved:1. Jurisdiction of the Assistant Commissioner to issue the show cause notice.2. Withdrawal of option under the Compounded Levy Scheme.3. Determination of the 'd' parameter of Rolling Mill 'B'.4. Validity of the Chartered Engineer's Certificate.5. Recalculation of duty liability and penalty.Detailed Analysis:1. Jurisdiction of the Assistant Commissioner to Issue the Show Cause Notice:The appellants argued that the show cause notice, which included allegations of wilful misdeclaration and suppression of facts, should have been issued by the Commissioner of Central Excise and not the Assistant Commissioner. They cited several decisions and Board's Circular No. 299/15/97/CX., dated 27-2-1997, which they claimed was binding on the Department. The learned DR countered that the appellants had not challenged the jurisdiction earlier and that the demand period was only six months, which could be issued by the Assistant Commissioner. The Tribunal found substance in the DR's submissions, noting that Section 11A(1) was amended in 1992, allowing any Central Excise Officer to issue such notices. The Tribunal held that no infirmity was caused by the issuance of the show cause notice by the Assistant Commissioner.2. Withdrawal of Option under the Compounded Levy Scheme:The appellants contended that they could withdraw their option to work under the Compounded Levy Scheme until the verification/determination by the Commissioner. They cited Section 5 of the Contract Act and various judicial decisions. The Tribunal rejected this argument, stating that the provisions of the Contract Act do not apply to taxation statutes and that under Section 3A of the Central Excise Act, the appellants had to discharge their duty liability in accordance with the provisions of Section 3A and Rule 96ZP. The Tribunal emphasized that the duty payment is for the financial year and the option cannot be changed mid-year.3. Determination of the 'd' Parameter of Rolling Mill 'B':The appellants claimed that the 'd' parameter of Rolling Mill 'B' was 350 mm, supported by a Chartered Engineer's Certificate. However, the Department's verification on 24-1-1998 found it to be 405 mm. The Tribunal noted that the verification was conducted in the presence of the appellants' partner and foreman, who signed the verification report. The partner admitted the change in his statement, which was not retracted. The Tribunal found no infirmity in rejecting the Chartered Engineer's Certificate and upheld the Department's findings.4. Validity of the Chartered Engineer's Certificate:The appellants presented a Chartered Engineer's Certificate dated 28-1-1998, which they claimed confirmed the 'd' parameter as 350 mm. The Tribunal observed that the Certificate was not sent to the Department immediately and was only submitted on 5-3-1998. The Tribunal found no infirmity in the Adjudicating Authority rejecting the Certificate, as it appeared to have been obtained after the Department's verification.5. Recalculation of Duty Liability and Penalty:The Tribunal noted that there was no evidence to conclude that the 'd' parameter was changed from 1-10-1997. The partner's statement indicated the change occurred in the first week of November 1997. Therefore, the change in the 'd' parameter should be considered from November 1997. The Tribunal directed the Adjudicating Authority to recompute the duty liability accordingly. The penalty imposed was deemed excessive and was reduced to Rs. 10 lakhs.Conclusion:The appeal was disposed of with the direction to recompute the duty liability from November 1997 and a reduction in the penalty to Rs. 10 lakhs.