Customs, Excise and Gold Tribunal - Mumbai
Rajnish Steel Industries, Mahalaxmi ... vs Commissioner Of Customs And Central ... on 5 December, 2001
Equivalent citations: 2002(81)ECC92, 2002(149)ELT348(TRI-MUMBAI)
JUDGMENT Jyoti Balasundaram, Member (J)
1. Applications for condonation of delay filed by M/s. Rajnish Steel Industries, M/s. Mahalaxmi Steels Pvt. Ltd., M/s. Shiv Steel Industries and M/s. Navyug Steel Industries are allowed having regard to the reasons contained therein namely that the units were closed and that in one case counsel for the applicant misplaced the appeal file.
2. We now take up the stay applications and appeals.
3. All the above appeals involve a common issue and are hence heard together and disposed off by this common order, after waiving the requirement of pre-deposit since the issue in dispute stands settled by the decision of the Larger Bench of the Tribunal in the case of Sawan Mal Shibumal Steel Rolling Mills. v. CCE, Chandigarh-I 2001 (42) RLT 75.
4. The appellants are manufacturers of hot re-rolled products of non-alloy steel by operating hot steel re-rolling mill. They are liable to pay duty at compounded rates in terms of Section 3A of the Central Excise Act, 1944, and the duty is determined depending on the annual capacity of production, or such factors relevant to the annual capacity of production of the factory in terms of Sub-section (2) of Section 3A of the Central Excise Act. Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 issued under Sub-section (2) of Section 3A of the Central Excise Act lay down, how the annual capacity of hot re-rolling mills is to be determined. The appellants opted for payment of duty on compounded basis. Since their annual capacity determined was less than the actual production of the mill during the financial year 1996-97, the Commissioner ordered that annual capacity shall be deemed to be equal to the production of the mill during the financial year 1996-97, in terms of Rule 5 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997. Subsequently the appellants applied for change in parameters for calculation of the annual capacity, and the recalculated capacity was less than the annual capacity earlier determined. However, since Rule 5 provided that in case the annual capacity determined by the formula in Sub-rule (3) of Rule 3 in respect of a mill in less than the actual production of the mill during the financial year 1996-97, then the annual capacity so determined shall be deemed to be equal to the production during 1996-97, the Commissioner in all these cases applied the annual capacity of 1996-97, even after change in parameters and even after reduction in annual capacity. It is the contention of the appellants, based upon the larger bench decision cited supra that Rule 5 which permits adoption of actual production of 1996-97 does not apply in all cases of change in annual capacity on account of change in machinery, and it is their contention that it is Rule 4(2) of the Rules that will be applicable in a case of change in annual capacity.
5. Learned DR reiterated the findings of the adjudicating authority that Rule 5 will continue to govern the situation where there is a change in capacity due to parameters and is not confined as to only cases where there is no change.
6. We have carefully considered the rival submissions. We find that in the decision of the larger bench relied upon by the learned counsel, the Tribunal has held that Rule 5 will have no application when change in machinery leads to reduction in the annual capacity of production, when the same is computed according to the parameters mentioned in Rule 3 of Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997, and that Rule 5 will apply only in cases where there is no change in the annual capacity of production, or the annual capacity of production is increased due to change in machinery of production. As set out earlier in the appeals disposed off today, the change in parameters has resulted in reduction of annual capacity of production. Therefore following the ratio of the larger bench decision we hold that Rule 5 is not relevant in the present situation and that actual production of 1996-97 cannot be adopted for such circumstances.
7. In the result we set aside the impugned order and allow the appeals by remand to the jurisdictional Assistant Commissioner for working out duty liability in the light of the above guidelines. The details of each appeal are found in Annexure "A" to this order.