2004 (97) ECC 90 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

East Regional Bench -- Kolkata

Shri V.K. Jain, Member (T) and Shri M.P. Bohra, Member (J)

Shree Balaji Re-rollers

Versus

Commr. of Central Excise & Customs, BBSR-II

Appeal EDM-393/03 & CO-110/03

[Arising out of Order-in-Original No. CCE/BBSR II/11/2001 dated 30.10.2001 passed by the Commr. of Central Excise of Customs, BBSR II]

Order No. A-428/KOL/2004, dt. 1.7.2004, Certified on 15.7.2004

Annual Capacity of Production

Duty Liability -- Determination -- Once changes are made in the installed machinery, the capacity of production would be consequentially affected. In the present case, since the capacity has admittedly fallen, the duty was required to redetermine taking into account the revised capacity of production and Rule 5 of the Hot Re-rolling Steel Mill Annual Capacity Determination Rules, 1997 is no bar for doing the same.

[Para 6]

Appeal allowed

PRESENT :

Shri B.N. Chowdhury, Adv. for the appellant.

Shri H.K. Chaturvedi, Jt. CDR for the respondent.

Cases Cited :

1. Awadh Alloys (P) Ltd. v. CCE, Meerut, 1999 (112) ELT 719 (Tri.) (Followed) .. [Paras 4, 6]

2. Commr. of Central Excise, Chandigarh v. Arun Steels, 2003 (162) ELT 84 (P&H) [Para 5]

3. Pepsu Steel Rolling Mills v. Commr. of Central Excise, Chandigarh, 2001 (127) ELT 779 (Tri.-Del.) [Para 4]

4. Sawan Mal Shibu Mal Steel Rolling Mills v. CCE, Chandigarh I, 2001 (42) RLT 75 (CEGAT-LB) (Followed) ................................................................................................................... [Para 6]

Per : M.P. Bohra

This appeal has been filed against the order of the Commissioner of Central Excise, BBSR II on 27th June, 2003, by which he determined and duty liability of the appellants on the basis of Annual Capacity of Production (ACP) of Re-rolling mill.

2. Brief facts of the case are that M/s. Shree Balaji Re-roller Industries are engaged in the manufacture of Hot Re-rolling Steel products. They opted for Rule 96ZP (3) for full and final discharge of Central Excise duty liability. The ACP of the mill was fixed at 3147.567 MT per annum of Hot Re-rolled products as per provisions of Rule 5 of the Hot-rolling Steel Mills Annual Capacity Determination Rules, 1997. The capacity production fixed was more in comparison to their average production and clearance for the last seven years. The Re-rolling Mill vide their letter dated 5.5.98, sought for permission of the Commissioner to reduce the `d' to 155 mm. The permission for reduction of pinion centre distance `d' was granted by the Commissioner vide letter dated 6th May, 1999. Subsequent to reduction of pinion centre distance `d', the appellants vide his letter dated 20.9.99 requested the Commissioner for re-fixation of Annual Capacity of Production which was rejected by the Commissioner. The appellants vide their appeal before CEGAT, the CEGAT vide its Order No. A-1480-Cal/2000 dated 8.9.2000, set aside the impugned order and remanded the matter to the Commissioner for re-fixing the annual capacity based upon the verification report of the Central Excise Authorities and to make the same effective from the actual change in the parameters carried out by the appellants. Accordingly, the annual capacity as per the change parameters was re-fixed wherein `d' has been measured as 160 mm and also to make it effective from 1st June, 1999 and the ACP was fixed at 975.738 M.T. In the present case, since the annual capacity calculated by the formula in Sub-rule (3) of Rule 3 of the said Rules is less than the annual production of the mill during the Financial Year, 1996-97. The annual capacity was fixed by the Commissioner to be 1645.533 M.T. as per the annual production figure to 1996-97. The appellant has challenged this duty liability by this appeal.

3. We have heard Shri B.N. Chowdhury, Ld. Advocate for the appellants and Shri H.K. Chaturvedi, Ld. Jt. CDR for the Revenue.

4. Ld.Advocate for the appellants submits that there is a change in machinery and installed capacity got reduced on account of such changes, the previous year's production cannot be taken as a guide for ascertaining capacity of production or for fixing duty liability. He also submits that this issue remains covered in favour of the assessee under the order of the Tribunal in the cases of M/s Awadh Alloys (P) Ltd. v. CCE, Meerut, 1999 (112) ELT 719 (Tribunal) and M/s Pepsu Steel Rolling Mills v. Commr. of Central Excise, Chandigarh, 2001 (127) ELT 779 (Tri.-Del.).

5. Ld. Jt. CDR, Shri Chaturvedi submits that the matter is pending before the Hon'ble High Court and the Hon'ble Supreme Court and a Reference is pending before the Hon'ble High Court of Punjab and Haryana at Chandigarh in the case of M/s Commr. of Central Excise, Chandigarh v. Arun Steels, 2003 (162) ELT 84 (P&H). He submits that in the present case, the annual capacity fixed by the Commissioner will determine the duty liability.

6. In the present case, as per the direction given by this Tribunal dated 29.11.2002, `d' factor was fixed as 160 mm and was made effective from 1.6.99. The duty demand was pertaining to the period 1st June, 1999 to 31st March, 2000, when the parameters of the furnace was changed. In the present case, the appellants have changed in machinery and has brought down the capacity of production. The Commissioner has determined the annual capacity. However, he has denied the relief to the appellants relying upon on the Rule 5 and has held that the appellant's production capacity shall be continued to be treated as 1645.533 MT instead of 975.738 MT on the basis of annual production figure of 1996-97. The decision is clearly erroneous. It is elementary principle that once changes are made in the installed machinery, the capacity of production would be consequentially affected. In the present case, since the capacity has admittedly fallen, the duty was required to redetermine taking into account the revised capacity of production and Rule 5 of the Hot Re-rolling Steel Mill Annual Capacity Determination Rules, 1997 is no bar for doing the same. The matter is squarely covered by the decision in the cases of M/s Awadh Alloys (P) Ltd. v. CCE, Meerut, 1999 (112) ELT 719 (Tri) and M/s. Sawan Mal Shibu Mal Steel Rolling Mills v. CCE, Chandigarh I, 2001 (42) RLT 75 (CEGAT-LB).

7. Consequently, we set aside the impugned order and allow the appeal with consequential relief to the appellants. CO also gets disposed of.

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