TaxTMI 
TaxTMI 
2002 (5) TMI 378
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....in the revised application dt. 22-5-2001. The application was admitted vide admission Order No. 11/2001 (Central Excise) dt. 4-6-2001. While admitting the application the Bench observed; inter alia, that the order dt. 29-3-2001 passed in adjudication by the respondent Commissioner in pursuance of the directions of the Hon'ble Andhra Pradesh High Court to finalise the adjudication by 31-3-2001 in Writ Petition No. 21450/2000 filed by the applicant, would not stand in the way of admission, as on the date of filing of the application, viz. 24-3-2001, the case was pending adjudication. 2. The settlement applications filed by S/Shri Pramod Kumar Agarwal, Proprietor of the applicant company and Gopal Agarwal, authorized signatory were admitted by this Bench vide admission Order No. 16/2001 (C.E.), dt. 24-9-2001. 3. The genesis of the case can be traced back to 1997, when through Finance Act, 1997, Section 3A was inserted under the CEA, 1944. The said Section empowered the levy and collection of excise duty on goods to be notified, by determination of the annual capacity of production, at the rates to be notified. Under the said Section, Notification No. 24/97-C.E. (N.T.),....
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....ction capacity as 1.490 MTs, based on the information given by an employee of the applicant and the documents submitted by the firm, he concluded that. "The furnace has power to melt 500 Kgs. of steel in normal load cycle and it has a crucible of volume to hold 1,500 kgs. of steel in molten condition". He had also mentioned in his report that the make of this furnace was not clear and that "reminiscences" of two more furnaces, discarded and not in usable condition were also found in the unit. Based on this certificate, the Commissioner fixed the ACP as 1,600 tonnes and duty liability at Rs. 83,334/- per month from September, 1997, in accordance with sub-rule (4) of Rule 3 read with sub-rules (1), (2), (3) of ACP Rules in his order dt. 29-9-97 from File C. No. IV/16/114/97 CX. (I.F.). 3.3 Subsequently, based on intelligence that the applicant had misguided the Chartered Engineer resulting in determination of lower capacity for the furnace, the Commissioner again engaged the same Chartered Engineer firm namely, M/s. Teccons & Co., whose engineers after visit to the applicant's foundry on 12-2-98 issued another certificate (referred to as Certificate II in this order), certify....
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....g space allowance for slag and tilting, and also considering the density of the metal at 1600 degree Centigrade. In doing so, the applicant relied on the opinion given by Shri Rajeswar Rao & Associates on 24-3-2001 on certificate III, wherein the Chartered Engineer has said that the density of the molten steel at 1600 degrees will be 7.06 MTs/M3 and sought for acceptance of the same. He has taken allowance for slag, shrinkage of molten metal due to addition of fluxes to remove steel, and space to be provided on top of the furnace for titling. It was, accordingly, contended that the net melt rate will be 0.616 MTs, as against 0.77 tonnes certified by the SISI. The applicant also stated further that the actual production from September, 1997 to March, 2000, was only 5,688.150 MTs, and adopting duty at the rate of Rs. 625/- per MT, total duty payable even on the actual production would be only Rs. 35,55,093/- and after deducting the duty already paid, i.e. Rs. 25,83,354/-, the balance payable will be only Rs. 9,71,740/- which is near to his admitted duty liability of Rs. 5,99,310/-. In the revised application the applicant admitted additional duty liability of Rs. 9,71,740/-. 5.&em....
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....), physical measurements have been taken by Chartered Engineers and Dy. Director, S1SI before furnishing their respective Certificates. If the measurements are taken of one and the same furnace/crucible, there should have been no difference in the said measurements, particularly when they are taken by a Chartered Engineer or Dy. Director, who are supposed to be experts in their field. However, the fact is there are differences, though minor in the diameter at the top and bottom of the crucible, and significant in height. This could have been caused, when taken by experts, only if different crucible/furnaces had been presented for measurement, which was possible in the instant case in view of the existence of more than one furnace in the unit. But such a plea has not been taken by the applicant, nor alleged by the Revenue. Hence, in the absence of such a plea, the Bench considers that measurements had been taken on all the three occasions of one and the same furnace/crucible only. 6.4 When measurements taken at different times give different results, in the normal course, and in terms of principles of natural justice, the first reading should be applicable and available to a....
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.... the willingness to discharge on actual/production clearance is not relevant or acceptable. The Bench, therefore, has to only examine the correctness of the ACP recommended in the three certificates and determine the correct differential duty, accordingly. 9. In this regard, the Bench also observes that before the Commissioner, the applicant had declared the capacity of furnace as 500 kgs. on the strength of an invoice 26/1106, dt. 17-3-90 issued by M/s. Mukand Ltd., Mumbai. As per Annexure XII to the SCN, dt. 10-8-98, which gives a comparison of parameters and capacity of the crucible/furnace supplied by M/s. Mukand, Mumbai and vis-a-vis is the one found available and in use on 28-8-97, the diameter of the crucible supplied by M/s. Mukand is 374 mm and its height 700 mm, whereas as per Certificate I the diameter of the crucible at the top is 65 cms and at bottom 60 cms, and the height is 76 cms. These wide variations in dimensions, are indicative of the fact that the capacity certified in Certificate I cannot pertain to the furnace supplied by M/s. Mukand. The dimensions indicated in Certificate II also lead to the same conclusion alone. However, the dimensions given in re....
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....nsity of the metal. As per sub-rule (3) of Rule 3 of ACP Rules, ACP = TCF x 3200, where TCF is the total capacity of the furnaces installed in the factory. 9.4 The Hand Book on Secondary Steel Industry (Induction Furnace & Re-rolling Mills) prepared by the Commissionerate of Central Excise & Customs, Chandigarh, in co-ordination with National Institute of Secondary Steel Technology, under the title 'Capacity of an Induction Furnaces' states that capacity of a furnace can be determined by reference to the rating in KWs given in the static converter, or in the invoice, or can be recorded from the KW meter of the panel of the furnace. It also says that capacity of the induction furnace is directly related to the input power. Alternatively, capacity of the crucible can also be approximated by using the formula W= V x D. 9.5 The physical dimensions given in the three certificates are as follows : Diameter Height Top Bottom (Depth) Certificate I 65 cms 60 cms 76 cms Certificate II 62.23 cm 57.15 cm 101.6 cms Certificate III 60 cm 55 cm 76 cm *37 cm 37 cm 70 cm * (for non-oper....
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....mally, in an empty crucible we would have measured directly the height of the crucible. In this case because the crucible was filled with molten metal we had the alternative method by following published departmental guidelines for crucible capacity determination which is by measuring the height of the coil and diameter of the crucible. In this case as the area was hot we could not properly measure the diameter of the crucible. Regarding your question of the effective height of the coil with respect to the crucible height, this is a design point which I am not aware of. If the coil is far away from the crucible inner surface then the coil height shall be more to be effective. I want to clarify that as per the formula the height of the coil/effective length of the coil is mentioned. So we have measured the height of the coil." (emphasis supplied)". "Q. 28 : I say that you have not measured the effective height of the coil with reference to depth of the crucible. What do you say ? Ans. : I had physically measured the height of the coil as required in the formula. However, I want to further clarify that normally we take the crucible inner dimensions, determine the capa....
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.... that when he visited the factory for conducting the trial run, the crucible was already full up to the top level with molten metal, even after skimming out the floating slag and the workers were instructed to add some more metal scrap by the departmental officers. Further, as for physical measurement, while the crucible capacity in terms of weight of steel was arrived at as 2.233 tonnes, the capacity of the crucible is certified as 2.75 tonnes and that too, without giving any reasons. 9.12 It is further noticed that the SCN also relies on certain statements and other evidences in its proposed revision of ACP based on Certificate II. Revenue has cited the statements of S/Shri Sadanand Singh, Foreman and S.K. Sharma, Chemist wherein it has been stated that the company was using 3 MT furnaces. However, as per Rule 3(3) of ACP Rules, for fixing capacity, only the installed capacity is relevant and none of the three Certificates is seen to have certified the installed capacity to be 3 tonnes. Another evidence relied on by the Revenue, is the entries in the pocket diary recovered from the Chemist on 12-2-98. However, the Consultant has challenged the admissibility of the diary a....
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...., and has argued that this comparison would prove that based on the average power consumed in these units, the furnace capacity of the applicant himself would work out to 683 kgs which is equal to the capacity recommended by SISI and also close to 500 kgs determined by the respondent Commissioner in his order dt. 29-9-97 based on Certificate I. This stand of the applicant is inconsistent, with the argument of faulty meter and excessive billing. One cannot argue that the electric meter was faulty and at the same time adopt the figures of such faulty meter to justify the production. On the other hand, the applicant himself has given statistics of the power consumed for 24 months, month-wise from April, 1998 to March, 2000 in his unit. As per this, the total power consumed is 49,68,729 units and quantity produced is 4,643 MTs resulting in consumption rate of 1,070 units per MT. This is nearer to the observation of the Chartered Engineer in certificate I that for running a crucible of 1.5 MTs, power of 970 units would be required. In other words, the average power consumed, as claimed by the applicant, was sufficient to run a crucible of 1.5 tonne capacity and, hence, the overall evide....
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....per hour". If so, he has conveniently omitted to note the last line in the first page of the same certificate which states, "Melt rate is the capacity of production but not holding capacity of crucible which can be termed as capacity". The certificate also indicates mass in the crucible as 1.54 tonnes which is similar to the observation in Certificte I viz. that "The furnace has power to melt 500 kgs of steel in normal load cycle and it has a crucible of volume to hold 1,500 kgs of steel in molten condition". Therefore, the Consultant of the applicant is wrong in taking 0.77 tonnes as the capacity of the furnace. In fact, as already stated earlier in para 9.6, the dimensions given in Certificates I and III are more or less same. So also the capacity of the furnace. A perusal of Certificate I, indicates that the Chartered Engineer has observed that a furnace with 1500 kgs capacity requires 937.5 KVA power supply. But only because he was under the mistaken impression that the power supply was only 480 KVA, and the time taken for one load was 6 to 7 hours, he had certified the capacity has 500 kgs. 10. Accordingly, the Bench considers that Certificate II cannot be taken on its....
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....taken to abide by the orders, of the Settlement Commission and has co-operated throughout the proceedings of this Bench. 12.1 Specifically, with reference to the immunity sought for from interest, the Bench would also like to record that in the scheme of discharge of duty liability of the impugned goods during the period in question, the duty was to be discharged based on the ACP determined by the Commissioner, and had no relevance to actual production and clearance. The applicant had accordingly, discharged the duty liability in terms of the ACP fixed by the Commissioner in his order dt. 29-9-97. Thereafter, i.e. till the Commissioner re-determined the ACP in his subsequent order dt. 29-3-2001, the applicant could not have discharged the duty as per the revised ACP till the issue of order. In this order, the Bench has held the latter order dt. 29-3-2001 passed by the Commissioner as non est. Hence the Bench feels that immunity from interest in this proceeding could be granted to the applicant. Of course, the applicant will be liable to pay the interest in terms of Section 32F(10) in case he fails to pay the duty within 30 days from the date of receipt of a copy of this ord....
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....umstances of the case ....." 14.1 However, the Bench observes that under Sec. 32E(4) of the Central Excise Act, "An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant." Further, Sec. 32L(1) ibid lays down specifically the condition under which a case may be sent back to the Central Excise Officer having jurisdiction. The said provision lays down that "The Settlement Commission, may, if it is of opinion that any person who made an application for settlement under Section 32E has not co-operated with the Settlement Commission in the proceedings before it, send the case back to the Central Excise Officer having jurisdiction who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application under Section 32E had been made". There is no other provision empowering the Commission to send back an application allowed to be proceeded with for disposal by jurisdictional Central Excise Officer. 14.2 More importantly, the scheme of the provisions relating to Settlement Commission envisage voluntary application by any person to have a case relating to him settled and the said application should be d....