2002 (1) TMI 348 - AT - Central Excise

Summary

Issues:
- Determination of annual capacity of production under Rule 3(3) of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997.
- Interpretation of Board's clarification regarding the assessment of annual capacity for units with multiple rolling mills and re-heating furnaces.

Analysis:
1. The appellants challenged the impugned order-in-original of the Commissioner regarding the determination of their annual capacity of production for a specific period under the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997. They were engaged in manufacturing hot re-rolled products of non-alloy steel and opted for duty payment based on their annual production capacity. The Commissioner had determined their capacity considering the installation of additional equipment and subsequent requests for parameter changes. The appellants contested the re-determination of their annual capacity based on the total capacity of both their mills, arguing that they did not run both mills simultaneously due to shared equipment like Electric Motor and Flywheel.

2. The appellants contended that they could not be considered to be running both mills simultaneously as they had common equipment, which limited their operational capacity. However, the Commissioner, in line with the Board's clarification, determined the annual capacity of the unit based on the total capacity of each rolling mill in the unit when each rolling mill has a re-heating furnace. The Commissioner's decision was supported by the clarification that if a unit has one re-heating furnace with two rolling mills, the capacity of the higher mill should be assessed as the annual capacity for the unit; but if each rolling mill has a re-heating furnace, the unit's capacity would be the sum total of the capacity of each rolling mill.

3. The Tribunal upheld the Commissioner's decision, stating that the appellants' admission of having two rolling mills and two re-heating furnaces was crucial in determining their annual capacity. The Tribunal found that the appellants' argument regarding the shared equipment preventing simultaneous operation of both mills was not sufficient to invalidate the determination made by the Commissioner based on the Board's clarification. Therefore, the Tribunal dismissed the appeal, affirming the Commissioner's order as legally sound and justified.

This detailed analysis highlights the key issues of the case, the arguments presented by the appellants and the Commissioner, the relevant legal provisions, and the final decision of the Tribunal based on the interpretation of the Board's clarification regarding the assessment of annual capacity for units with multiple rolling mills and re-heating furnaces.