Customs, Excise and Gold Tribunal - Mumbai
Maha Gujarat Iron And Steel Co. Ltd. vs Commissioner Of Customs And Central ... on 18 May, 2001
ORDER Gowri Shankar, Member (T)
1. The appeal is taken up for disposal with consent of both sides, after waiving deposit.
2. The appellant is engaged in re-rolling flat steel products and has for this purpose in its factory three rolling mills. Its liability to duty was determined by the Commissioner in accordance with the provisions of the Hot Re-rolling Steel Mills annual Capacity Determination Rules, 1997, taking into account the six parameters prescribed for this purpose in the Rules. By its letter dated 31.3.1998 it signified to the assistant Commissioner its intention to reduce one of these factors, the distance of pinion stand, in its last rolling stand, requesting corresponding reduction in the capacity. The Commissioner found that as a result of the its annual capacity would be reduced to 22102 tonnes. Rule 5 of the Rules provides that where the capacity determined under Rule 3 falls below the actual quantity of production in 1996-97 the capacity shall be based on that production. The appellant's production in 1996-97 was 28185. Therefore the Commissioner determined the capacity 28185 tonnes. The manufacturer appealed this order to the Tribunal, contending that it had not been heard before the capacity was re-determined. The Tribunal, accepting this contention,set aside the order of the Commissioner and remanded matter to him to determine its capacity after hearing the manufacturer.
3. Before the Commissioner, the manufacturer contended that it was incorrect to determine the capacity on the basis of the production in 1996-97; citing before him the decision of this Tribunal in Awadh Alloys (P) Ltd. Vs. CCE 1999 (113) ELT 719. In its decision, the Tribunal held that where there is a change in any of the determinants of the annual capacity is to be determined in accordance with sub-clause(2) clause 4 of the Rules and not in accordance with Rule 5. After considering this submission, the Commissioner has passed the order which is now impugned in this appeal.
4. In that order the Commissioner accepts that in the light of the Tribunal decision in Awadh Alloys (P) Ltd. Vs. CCE it would be incorrect to base the capacity upon the production in 1996-97; noting that he provisionally follows the said decision as it has been appealed to the Supreme Court. He has, however, fixed the capacity for 1998-99 at 24345 tonnes. Appointing out of this amount the quantity 12250 tonnes for the period from 1.4.1997 to 13th September, 1998 and 12905 tonnes for the remaining part of the financial year. He has also determined the capacity for 1999-2000 to be 26736 tonnes.
5. Counsel for the appellant contends that he Commissioner has not given any basis for determination of the annual capacity and also faults the division into the two periods/parts of the year that he has done. He points out that the capacity that the Commissioner has now fixed is higher than the capacity that he had fixed in his earlier order. The capacity that he has fixed in his earlier order is 22102. The capacity that he has now determined is clearly wrong.
6. We have to accept this submission. The earlier determination of 22102 tonnes was arrived at by the Commissioner after considering the reduction in factor '4d' on one of the rolling stand. The Commissioner does not say that any of the parameters was subsequently altered leading to increase in capacity. The capacity that he has now fixed could not be higher than the capacity that he has fixed earlier. In the absence of any basis that he has furnished for his conclusion we are unable to support it.
7. The same position would hold true for the capacity for the apportioned month. The appellant had indicated the change in parameter '4d' to be effective from May, 1998. Therefore the rate of duty applicable to it depends upon this parameter. Therefore the duty would have to be for the period from May, 1998 to the end of the financial year. There is no reason given for making change effective from 14th September, 1998.
8. In these circumstances, we allow the appeal and set aside the Commissioner's order. In order to avoid further remand, the Commissioner should indicate clearly and fully to the appellant the basis upon which that he proposes to fix the capacity and the duty, and precisely indicate the date from which the rate will apply, indicating clearly reasons thereof. The appellant shall promptly, not later than 20 days from the receipt of this communication, file its objections. The Commissioner shall thereafter give the appellant a reasonable opportunity of being hear and pass orders determining the capacity. Strictly speaking the determination arrived at by the Commissioner of 1999-2000 is outside the subject matter of the appeal. We are concerned in this appeal with the determination of the capacity of 1998-99. By the same token it is not prudent on the part of the Commissioner to include this year passed on a direction from the Tribunal to determine the capacity for this year. We would therefore strictly suggest to the Commissioner that he pass separate orders upon the notice for 1998-99 and 1999-2000 and we would therefore urge the Commissioner that in the background in which the appeal is filed, give reasons to the appellant for proposing to determine whatever capacity he arrives at.
9. Appeal accordingly allowed and the impugned order set aside.