2004 (3) TMI 632 - AT - Central Excise

Summary

Issues:
1. Dispute over determination of annual capacity of production (ACP) of a steel rolling mill.
2. Appellants contesting the clubbing of capacity due to the bigger mill being idle.
3. Interpretation of Rule 4 of the Hot Re-Rolling Mills Annual Capacity Determination Rules, 1997.
4. Relevance of a clarification issued by the Board regarding mills with roughing stand and finishing mills in different sections.

Analysis:

1. The dispute in this case revolves around the determination of the annual capacity of production (ACP) of a steel rolling mill. The appellants, a steel rolling mill, had opted to pay duty on rolled products and declared the parameters of their rolling mills as per Notification No. 32/97 CE. They claimed to have two rolling stands corresponding to each furnace, with the bigger mill having a 'd' factor of 228.6 mm, which they stated was not running for 12 years and only occasionally used for roughing purposes. However, on verification, it was found that the stands of the bigger mill were indeed being used, leading to a disagreement over the capacity calculation.

2. The Commissioner determined the capacity of the appellant's factory based on the total capacity of the two mills installed, despite the appellants' argument that the bigger mill was idle and only its stands were used for roughing scrap in the smaller mill. The appellants challenged this capacity fixation, claiming that the bigger mill's limited use should not be considered in determining the overall capacity. The contention was whether the clubbing of capacity due to the presence of the idle bigger mill was legal and appropriate.

3. The appellate tribunal analyzed Rule 4 of the Hot Re-Rolling Mills Annual Capacity Determination Rules, 1997, which mandates the Commissioner to determine the total capacity of hot rolling mills installed in a factory. The rule specifies the determination of the "total capacity of the hot rolling mill installed," indicating that where multiple rolling mills are present, the total capacity must be calculated by summing the individual capacities. The tribunal upheld the Commissioner's decision to determine the total capacity based on the parameters of each mill separately and then aggregating the figures.

4. The appellants referenced a clarification from the Board regarding mills with roughing stand and finishing mills in different sections, suggesting that the RPM of the finishing mill should be used for capacity determination in such cases. However, the tribunal noted that this clarification did not support the appellants' case as it pertained to a scenario with a single mill in two sections, unlike the present case with two independently capable rolling mills in one factory. The tribunal concluded that the infrequent use of the second mill did not affect the overall installed capacity, and thus, rejected the appeal.

In conclusion, the tribunal found no merit in the appellant's arguments and upheld the Commissioner's decision regarding the determination of the annual capacity of the steel rolling mill, dismissing the appeal accordingly.