2003 (8) TMI 416 - AT - Central Excise

Summary

Issues: Interpretation of provisions under Notification No. 42/98-C.E. (N.T.), dt. 10-12-98 for determining annual capacity of production.

Analysis:
The appellant challenged an Order-in-Original issued by the Commissioner of Central Excise, Jallandhar, related to the interpretation of provisions under Notification No. 42/98-C.E. (N.T.), dt. 10-12-98. The dispute revolved around the declaration made by the appellant regarding the installation of a Stenter with three chambers initially, which was later increased to four chambers. The departmental authorities provisionally finalized the annual capacity not based on the appellant's declaration. Show cause notices were issued demanding differential duty, leading to the Commissioner finalizing the provisional assessment and confirming the demand, which was contested by the appellant.

The Departmental Officers observed that the appellant had made arrangements inside the Stenter to facilitate the movement of grey fabric below the Stenter chain, which they considered as the attachment of a "float drying machine." This led to the fixation of the annual capacity based on the number of chambers, considering the arrangement made by the appellant inside the Stenter. The appellant argued that the additional facility made inside the Stenter should not be considered as the installation of a float drying machine. They contended that any drying effect on the fabric due to the arrangement would be reflected in the enhanced quantity of processed fabrics, which is a factor for determining the annual capacity of production.

The Tribunal found merit in the appellant's contention, emphasizing the provisions of the notification dated 10-12-1998 for determining the annual capacity of production. The Tribunal highlighted that the rules did not prohibit providing more Stenter chains within a chamber to achieve multiple passes. Therefore, the presence of additional Stenter chains or arrangements for fabric movement below the Stenter chain should not lead to multiplying the number of chambers. Any additional facility for drying would naturally enhance the total quantity of production, thus impacting the Annual Capacity of Production as calculated under the Rules. Consequently, the Tribunal held that the order under challenge was not sustainable, setting it aside and allowing the appeal, granting the appellant all consequential reliefs.