Customs, Excise and Gold Tribunal - Tamil Nadu
Tamilnadu Forgings Pvt. Ltd. And ... vs Commissioner Of Central Excise, ... on 12 October, 2001
Equivalent citations: 2002(147)ELT472(TRI-CHENNAI)
JUDGMENT
S.L. Peeran
1. Both these appeal arise from a common question of law and facts and hence they are taken up together for disposal as per law.
In Appeal E/486/2001 in order-in-appeal No. 6/CLS/2001-TECH dated 31.1.2001 while in Appeal No. E/487/2001 by order-in-original No. 8/CLS/2001-TECH dated 31.1.2001 passed by the same Commissioner of Central Excise. The appellants are engaged in manufacture of hot re-rolled products falling under chapter sub-heading 7214.90 of CET and covered under heading re-rolling steel Mills Annual Capacity Determination Rules. The appellants changed the parameters of the re-rolling mills vide their declaration filed in notification No. 45/97 dated 30.8.97 inter-alia indicating the furnace as batch type in the case of E/486/2001 and pusher type in the case of E/487/201.
2. In the case of E/486/2001, that is, in the case of Tamilnadu Forging Pvt. Ltd. the Commissioner has recorded the finding as follows:-
"I have carefully gone through the records, reply to the show cause notice and submissions made by the assessee at the time of personal hearing. As seen from the records, the ACP in this case was fixed finally on 22.9.97, after duly considering the ACP under Rule 3 (taking the furnace to be batch type) and finally arriving at the ACP as 1390.MTs in terms of Rule 5 of Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997. As per Rule 5, in case the ACP determined by the formula under Rule 3(3) is less than the actual production of the mill during 1996-97, then the ACP is deemed to be the actual production of 1996-97.
The show cause notice sought to reject the request of the assessee for re-fixing the ACP with respect to change of furnace from pusher to batch type and to maintain the ACP at 1391 MTs as per Rule 5 of Hot Re-rolling Steel Mills Annual Capacity Determination Rule, 1997. I am unable to understand the purpose served by the issue of the show cause notice. If the furnace is treated as batch type the ACP would be 503.054 MTs and if as pusher type the ACP would be 1006.108 MTs. i.e. irrespective of whether the furnace is pusher or batch type, ACP fixed in terms of the nature of the furnace would be less than the actual production of 1996-97. In these circumstances, there is no other option but to confirm the fixation under Rule 5 of Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997."
3. While in the case of E/48/2001, that is, in the case of Coromandel Steel Products the Commissioner has recorded the finding as follows:-
"I have carefully gone through the records of the case and the submissions made in the reply to the show cause notice and at the time of personal hearing. As seen from the records, the assessee has originally declared the parameters of the Re-rolling Mills vide their letter dated 15.9.97 and the same was verified by the Technical Expert Dr. L. Vijahyaraghavan on 30.9.97 and based on this the Annual Capacity of Production was fixed as 3045 Mts and communicated to the assessee on 31.8.98. As per the original declaration, the assessee had interalia declared that the furnace is of pusher type. The Annual Capacity Determination Rules, 1997, and this was done based on the declaration filed by the assessee and on verification by the Technical Expert, Dr. L. Vijayaraghavan, of the IIT, Chennai. The Annual Capacity of Production having been finally fixed on this basis as per the prescribed procedure, there appears to be no valid ground for reviewing the matter and the assessee making a claim for such review after a period of nearly 18 months from the initial declaration is hardly justified.
In the circumstances, I find no reason to give credence to the submission made by the assessee and also to the second technical opinions obtained from Shri Sethumadhavan (Anna University) and Dr. L. Vijayaraghavan (IIT, Chennai). It is pertinent to note here that Dr. Vijayaraghavan had earlier verified and confirmed the furnace as pusher type and therefore, the further technical opinions obtained with regard to the same furnace lack credibility. Therefore, on this account also there is no valid ground for revising the ACP.
Further, the decision of the CEGAT, Chennai in the case of M/s. Indian Steel and Allied Products dated 4.8.2000 cited by the assessee in their defence is not applicable in this case. Firstly, in the instant case, the Annual Capacity of Production has initially been fixed on the basis of declaration and after the verification has been done by a Technical Expert from a reputed institution. Whereas in the case law cited, the Annual Capacity of Production was originally fixed merely on the declaration and verification by the Divisional Assistant Commissioner. Secondly, the Tribunal's decision referred to is the fixation of the Annual Capacity of Production in terms of Rule 5 relying on the decision in the case of M/s. Awadh Aloys (P) LTd. (1999 (112) ELT 719 (T)), which is not the case here. The circumstances of this case are therefore clearly distinguishable from the facts in the case law cited. The request of the assessee for refixing the Annual Capacity for Production with respect to the change of furnace from batch is therefore liable to be rejected."
4. We have heard Ld. Counsel Shri S. Venkatachalam for the appellants and Shri Soundararajan, DR for the revenue.
5. Ld. Counsel submitted that in the case of Tamilnadu Forging Pvt. Ltd. the annual capacity of production was provisionally fixed at 709.436 MT. The appellant field a declaration on 11.9.97 intimating the parameter "d" at 159mm. It was verified by Range Superintendent on 15.9.97 and found that the value of "d" is 156mm and thus there was a change in the parameter. Consequently, the ACP was worked out as 503.054 MT under Rule 3 of HRSMACD Rules. The department accepted the type of furnace as batch type. However, the ACP was determined at 1390.925 Mt as per Rule 5 of the said Rules and this was intimated to the appellants vide order dated 22.9.97. the appellant by their letter 7.1.99 informed the department that they made certain modifications in the furnace and the furnace remained batch type as there was only change in the heat insulation. He contended that there was no dispute about the furnace being batch type and therefore question of applying Rule 5 in treating the furnace as pusher type does not arise. They relied on the technical experts opinion that is Dr. L. Vijayarghavan, Prof. IIT and that of Shri Sethumadhavan, Prof. of Anna University who gave the report that the furnace is a batch type. However, the departmental officials took the advice from their expert who stated that it is a pusher type furnace. It is contended that there is a clear violation of principles of natural justice in rejecting the appellants technical opinion and considering the furnace to be a pusher type. It is contended that there is no change in the furnace by making alteration in heat insulation. There was no mechanism installed to make the furnace a pusher type. They relied on the judgment rendered by the Tribunal as reported in the case of Balaji Steel Rolling Mills Pvt. Ltd. as reported in 2000 (124) ELT 363, Avadh Alloys Ltd. v. CCE as reported in 1999 (112) ELT 719 and Sawanmalsir v. CCE as reported in 2001 (127) ELT 46 (LB) wherein it has been held that Rule 5 of the said Rules cannot be applied and hence Ld. Counsel submits that the order is required to be set aside.
6. In the case of Coromandal Steel Products also he made a similar submission and relied on the same citations. He also pointed out that the Commissioner had clearly violated the principles of natural justice in not adopting to technical advice. He contended that the parameters have not been properly seen and the furnace is not a pusher type. Therefore, the impugned order is required to be set aside.
7. Ld. Dr reiterated the department contention.
8. On a careful consideration of the submission and on perusal of the Tribunal judgments, we notice that the Tribunal has clearly indicated in the Larger Bench judgment in the case of Sawanmalsir v. CCE (supra) that Rule 5 of the said rules cannot be applied. It is also seen from the other judgments, that is, in the case of Balaji Steel Rolling Mills Pvt. Ltd. (supra) that for the purpose of treating of furnace to be a pusher type there has to be a mechanism installed inside the furnace for the purpose of automatic operations. It is contended by the appellant that experts had given their opinion in their favour. The revenue is relying on their experts. But the experts of the appellants are Professors of Universities. There is no reason to reject their expert opinion. The experts have not been cross-examined to seek further clarification. The department has to establish the furnace to be a pusher type before they fix the liability and confirm demands. As there is clear mis-application of mind and non-examination of the appellant's expert opinions and in the light of the judgments cited by the Counsel, we are of the considered opinion that the order is required to be set aside and remanded to the Commissioner for de novo consideration with a direction that the Commissioner shall take fresh opinion by getting the furnace examined through experts and give appellants an opportunity to controvert the opinion, if necessary, and establish their case. The Commissioner shall also hear the appellant and pass a considered speaking order in the light of the Tribunal's judgment noted supra.
(Pronounced in Open Court on 12-10-01)