2004 (7) TMI 494 - AT - Central Excise

Summary

Issues:
- Duty liability determination based on Annual Capacity of Production (ACP) of Re-rolling mill.
- Reduction of pinion centre distance affecting production capacity.
- Challenge to duty liability based on machinery changes and reduced production capacity.
- Interpretation of Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997.

Analysis:
1. The appeal was filed against the Commissioner's order determining duty liability based on the Annual Capacity of Production (ACP) of the re-rolling mill. The ACP was initially fixed at 3147.567 MT per annum, which was higher than the average production and clearance of the appellants over the past seven years. Subsequently, the appellants requested a reduction in pinion centre distance, which was granted, leading to a re-fixation of the ACP at 975.738 MT effective from June 1, 1999. The Commissioner, however, fixed the ACP at 1645.533 MT based on the annual production figure of 1996-97, which was challenged in the appeal.

2. The appellant's advocate argued that changes in machinery and reduced installed capacity should not be based on previous year's production for determining production capacity and duty liability. The advocate cited precedents in favor of the assessee, including cases of M/s. Awadh Alloys (P) Ltd. and M/s. Pepsu Steel Rolling Mills, supporting the appellant's position.

3. The Joint CDR representing the Revenue contended that the matter was sub judice in the Hon'ble High Court and Supreme Court, with a pending Reference before the Hon'ble High Court of Punjab and Haryana. He emphasized that the annual capacity fixed by the Commissioner should determine duty liability.

4. The Tribunal noted that the appellants had changed machinery, reducing the production capacity, and the Commissioner's decision to maintain the ACP at 1645.533 MT was deemed erroneous. It was emphasized that changes in machinery would affect production capacity, and Rule 5 should not hinder the redetermination of duty liability based on revised production capacity. Precedents were cited to support the appellants' position.

5. Consequently, the Tribunal set aside the Commissioner's order, allowing the appeal and providing consequential relief to the appellants. The case was disposed of accordingly.