2005 (3) TMI 616 - AT - Central Excise

Summary

Issues:
1. Non-compliance with Section 35F of the Central Excise Act.
2. Determination of Annual Capacity of Production (ACP) by the Commissioner.

Analysis:
1. The appeals before the Appellate Tribunal CESTAT, CHENNAI were against the rejection of appeals by the assessee by the Commissioner (Appeals) due to non-compliance with Section 35F of the Central Excise Act. The Commissioner (Appeals) had directed the appellants to pre-deposit Rs. 2 lakhs out of the total duty amount of Rs. 3,98,110, which was not done by the party, resulting in the dismissal of their appeals. The Tribunal, after hearing both sides, found that the appeals required final disposal and proceeded accordingly.

2. The main contention in the appeals was regarding the determination of Annual Capacity of Production (ACP) of the re-rolling mill by the Commissioner. The party claimed they had not received any official communication from the Commissioner regarding the ACP determination. They only received letters from the Assistant Commissioner indicating provisional and final ACP figures, but no formal order of determination was issued by the Commissioner as required by the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997. The Tribunal observed that without a formal order of ACP determination and communication by the Commissioner, any demand of duty based on ACP could not be sustained. The Tribunal agreed with the appellant's argument that the demand of duty was legally flawed due to the absence of proper communication and determination of ACP.

3. The Tribunal noted that the appellant had a strong case for waiver of pre-deposit and stay of recovery based on the lack of formal communication from the Commissioner regarding ACP determination. Therefore, the Tribunal set aside the impugned orders and allowed the appeals by way of remand. The Commissioner (Appeals) was directed to dispose of the appeals on merits without insisting on pre-deposit, in line with the law and principles of natural justice. This decision was made to ensure a fair consideration of the appeals without the burden of pre-deposit requirements.

This detailed analysis highlights the key issues of non-compliance with Section 35F and the lack of proper ACP determination by the Commissioner, leading to the Tribunal's decision to remand the case for a fresh consideration on merits without the pre-deposit obligation.