2001 (8) TMI 759 - AT - Central Excise

Summary

Issues:
1. Determination of annual capacity of a re-rolling mill under the compounded levy scheme.
2. Classification of the re-rolling mill as a high speed mill or a low speed mill.
3. Validity of the Commissioner's order based on verification report.
4. Allegation of abuse of official position by the Commissioner.
5. Applicability of duty based on the classification of the mill.

Analysis:
1. The appellant, a re-rolling mill, was discharging Central Excise duty liability under the compounded levy scheme, which is determined based on the annual capacity of production. The dispute revolves around the annual capacity determined for the appellant's mill.

2. The classification of the appellant's re-rolling mill as a high speed mill or a low speed mill is crucial in determining the annual capacity. The definition provided in the Explanation to Notification No. 32/97-C.E. (N.T.) differentiates between high speed and low speed mills based on the speed of production. The appellant claimed their mill to be a low speed mill, while the Commissioner, relying on a verification report, classified it as a high speed mill.

3. The Commissioner's order, based on the verification report, fixed the annual capacity of the mill without concrete evidence supporting the classification as a high speed mill. The appellant contested this classification, highlighting the absence of any mention of speed in the verification report. The Tribunal remanded the case back to the Commissioner for a fresh order, emphasizing the need for proper verification and consideration of relevant facts.

4. Despite the remand order, the Commissioner's subsequent order confirmed the previous classification without verifying the speed of the mill, leading to allegations of abuse of official position. The lack of material supporting the higher duty demand for a high speed mill further raised concerns about the validity of the decision.

5. Ultimately, the Tribunal found no substantial evidence to justify the higher duty demand for a high speed mill classification. Consequently, the adjudication order was set aside, and the appeal was allowed, directing the appellant to pay duty applicable to low speed mills. This decision underscores the importance of accurate classification and proper verification in determining excise duty liabilities for re-rolling mills under the compounded levy scheme.