Century Enka down over 2.5%

Century Enka is weak today, currently down 2.62% at Rs.147, with an intra day low at Rs.145Its 52-week high and low stands at Rs.164.25 and Rs.92 respectively.

The stock is reacting to the news which came in yesterday after the market closed. The company has received an order from the Commissioner of Central Excise, Raigad, for a central excise duty demand of Rs.229.27 crore and an equal amount of penalty and interest. The demand was raised pursuant to the show-cause notices issued by the Central Excise department during the years 2001 to 2004.

This demand relates to bifurcation in the year 2000 of two units of the Company at Mahad Site. The Department of Central Excise, prior to issue of show cause notices approved bifurcation of two units and issued separate licences for each unit. The Department later on cancelled the licences which was challenged by the company. The issue of two licences was decided by Commissioner of Central Excise (Appeal) as well as Central Excise and Service Tax Appellate Tribunal (CESTAT) in favour of the Company. The Department of Central Excise went into appeal against the order of CESTAT before Hon’ble Bombay High Court which was dismissed for delay in filing the appeal.

The company has satted that as the issue of bifurcation of two units has been settled in favour of the company, the question of demand of excise duty on the company does not arise. However, Excise Department has ignored the existence of two units which entitled the Company to a specific rate of excise duty on sales and raised the alleged demand of excise duty (a) on an abnormally exaggerated notional sales value; (b) inflated sales quantity: and (c) without legitimate deduction of expenses and CENVAT Credit.