Century Enka to challenge central excise duty demand

Century Enka Ltd has been served with an order by the Commissioner of Central Excise, Raigad, for central excise duty demand of Rs 229.27 crore and a matching amount as penalty and interest at an appropriate rate.

The company said the demand was raised following the show cause notices the department had issued during 2001–2004 to the company relating to bifurcation of two units at Mahad in 2000.

The department, which approved the bifurcation and issued separate licences for each of them earlier, later cancelled the licences that was challenged by Century Enka Ltd (CEL).

In a communication to the stock exchanges, CEL said the issue of two licences was decided by the Commissioner of Central Excise (Appeal) as well as Central Excise and Service Tax Appellate Tribunal (CESTAT) in favour of the company.

But the department went on appeal against the order of CESTAT to the Bombay High Court. However, the appeal was dismissed due to the delay in filing. Century Enka contended that since the bifurcation of two units had been settled in its favour, the “question of demand of excise duty on the company does not arise”.

The excise department had ignored the existence of two units that entitled CEL to a specific rate of excise duty on sales. Moreover, the excise duty demand was made on an “abnormally exaggerated notional sales value”, inflated sales quantity and “without legitimate deduction” of expenses and CENVAT credit. CEL said it would challenge the demand in an appropriate forum.

The shares of CEL were trading at Rs 153.20, a gain of 10 paise, on the BSE.

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