2006 (7) TMI 42 - AT - Central Excise

Commissioner rules duty on both machines unfair due to power constraints. Interest and penalties unwarranted. Revenue's argument dismissed.

The Commissioner found that demanding duty on both machines was unfair as only one could be used at a time due to power limitations. The duty payment on ... Central Excise – Compounded levy – Assessees contention that two machines were installed but they were not functioning simultaneously, only one machine was working at a time as insufficiency of power supply – Liable to pay duty on one installed machine Issues:- Duty payable on two cold rolling machines- Imposition of penalty on the company and authorized signatory- Challenge to duty computation based on number of machines installed- Validity of certificate from Assistant Engineer regarding power supplyAnalysis:The appeals arose from Orders-in-Appeal confirming demands for duty on two cold rolling machines and imposing penalties. The Commissioner accepted the assessee's evidence that only one machine could function at a time due to power supply limitations. The certificate from the Assistant Engineer stated that the power supply could support only one machine, not two simultaneously. The Commissioner found that demanding duty on both machines was unfair as only one could be used at a time. The duty payment on one machine was deemed proper, and the confirmation of duty on the second machine was unjustified. The imposition of interest and penalties was also deemed unwarranted, leading to the setting aside of the Assistant Commissioner's order and allowing of the appeals.The Revenue challenged the order, arguing that duty should be computed based on the number of machines installed, regardless of their simultaneous functioning. The JDR contended that the impugned order did not align with the relevant Notification. However, the Counsel defended the Order-in-Original, emphasizing that production figures were crucial for determining duty liability. It was highlighted that both machines could not function simultaneously due to power shortages, and production figures corresponded to only one machine. The JDR alleged mis-declaration and argued against the legality of the order.Upon careful consideration, it was noted that the certificate from the electricity supply authority, along with the original power supply distribution letter, was unchallenged by the Revenue. The appellate authority accepted this fresh evidence, as there was no challenge to its authenticity. The Revenue's argument that production figures should be based on both machines was dismissed since only one machine could operate at a time. The Commissioner's findings were deemed just and proper, with no identified infirmity. Consequently, all appeals were rejected, and the impugned order was upheld.