2009 (6) TMI 1012 - AT - Customs

Summary

Issues involved: Re-determination of Annual Capacity Production (ACP) u/s Rule 5 of Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 leading to duty liability as per Rule 96ZB of Central Excise Rules, 1944.

The judgment by Appellate Tribunal CESTAT CHENNAI pertains to the re-determination of Annual Capacity Production (ACP) of the appellants' re-rolling mills u/s Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997. The Commissioner of Central Excise had directed the assessee to discharge duty liability based on the re-determined ACP, following the procedure under Rule 96ZB of the Central Excise Rules, 1944, up to 31.3.2000, and thereafter on an ad valorem basis.

In the appeal against the above order, the Tribunal considered the argument put forth by the ld. Counsel for the appellants regarding the applicability of Rule 5 in cases where there is a reduction in the ACP due to changes in parameters. Citing the Larger Bench decision in Sawanamal Shibumal Steel Rolling Mills Vs. CCE, Chandigarh [2001 (127) ELT 46 (Tri.LB)], and the Tribunal's decision in Rajnish Steel Industries Vs. CCE, Rajkot [2002 (149) ELT 348 (Tri.Mumbai)], it was established that Rule 5 applies only when there is no change in the annual capacity of production or when the capacity is increased due to changes in machinery. Rule 5 does not apply when changes in machinery result in a reduction in the ACP. Consequently, the impugned order was set aside, and the appeal was allowed.