2009 (8) TMI 886 - AT - Central Excise

Issues:
- Determination of annual production capacity of re-rolling mills
- Interpretation of Rule 3(3)(b) of Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997
- Consideration of different factors in determining annual capacity
- Adherence to show cause notice in determining annual capacity

Analysis:

Issue 1: Determination of annual production capacity of re-rolling mills
The case involved the determination of the annual production capacity of a re-rolling mill by the Commissioner based on the number of sections in the mill and the 'd' factor in each section. The appellant contested the Commissioner's method of calculation, arguing that the 'd' factor should be based on the nominal center distance of the pinions in the pinion stand connecting the last rolling mill drive of the finishing mill, as per Rule 3(3)(b) of the Rules. The Tribunal found that the Commissioner's calculation method did not align with the Rule and remanded the matter for the annual capacity determination to be done in accordance with the Rule.

Issue 2: Interpretation of Rule 3(3)(b) of Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997
The interpretation of Rule 3(3)(b) was crucial in this case as it defined the nominal center distance to be considered for determining the 'd' factor in the re-rolling mill. The appellant argued that the Rule specified the pinion center distance of the last rolling mill drive of the finishing mill for this purpose. The Tribunal agreed with the appellant's interpretation and held that the Rule supported the appellant's contention, emphasizing that the Rule recognized the presence of multiple mills or sections in a re-rolling mill setup.

Issue 3: Consideration of different factors in determining annual capacity
The Commissioner had determined the annual capacity of the re-rolling mill based on the connection between the rolling mills and the continuous passage of material through the stands. However, the Tribunal found that the 'd' factor should be determined based on the nominal center distance of the pinions in the pinion stand connecting the last rolling mill drive of the finishing mill, as per Rule 3(3)(b). The Tribunal emphasized the importance of adhering to the specific factors outlined in the Rule for accurate determination of annual capacity.

Issue 4: Adherence to show cause notice in determining annual capacity
The appellant raised concerns regarding the Commissioner's deviation from the factors proposed in the show cause notice while determining the annual capacity of the re-rolling mill. The Tribunal noted that the Commissioner's calculation method differed significantly from what was initially proposed in the show cause notice. The Tribunal emphasized the importance of consistency and adherence to the factors outlined in the Rule for determining the annual capacity, directing the matter to be remanded for a proper determination in accordance with the Rule.

Overall, the Tribunal set aside the impugned order and remanded the matter to the jurisdictional Commissioner to fix the annual capacity of production of the re-rolling mill in accordance with Rule 3(3)(b) and the explanation provided in the Rule.

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