2013 (1) TMI 666 - SC - Central Excise

Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 - whether applicable where a manufacturer proposes to make some change in the installed machinery in terms of Rule 4(2) of the 1997 Rules - Held that - As decided in CCE, Chandigarh vs. Doaba Steel Rolling Mills 2011 (7) TMI 10 - SUPREME COURT OF INDIA Rule 5 of the 1997 Rules will be attracted for determination of the annual capacity of production of the factory when any change in the installed machinery or any part thereof is intimated to the Commissioner of Central Excise in terms of Rule 4(2) of the 1997 Rules.

Summary

Issues:
1. Interpretation of Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997.
2. Applicability of Rule 5 in cases of proposed changes in installed machinery under Rule 4(2) of the 1997 Rules.
3. Challenge to the vires of Rule 5 of the 1997 Rules in the High Court.
4. Permissibility of raising new legal challenges at different stages of appeal proceedings.

Analysis:
1. The Supreme Court addressed the issue of the interpretation of Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997. The Court considered whether Rule 5 would be attracted when a manufacturer intends to make changes in the installed machinery as per Rule 4(2) of the 1997 Rules. The Court noted that a similar question had been previously examined in Commissioner of Central Excise, Chandigarh vs. Doaba Steel Rolling Mills, where it was held that Rule 5 would apply for determining the annual production capacity if any changes in machinery were notified to the Commissioner of Central Excise.

2. The Court discussed the applicability of Rule 5 in cases of proposed changes in installed machinery under Rule 4(2) of the 1997 Rules. The counsel for the assessees raised concerns challenging the vires of Rule 5 itself in the High Court. However, the Court rejected the request to adjourn the appeals awaiting the High Court decision on the vires of Rule 5. The Court emphasized that since the challenge to Rule 5 was not raised before the Tribunal or the High Court earlier, the assessees could not introduce this issue at a later stage of the proceedings.

3. Regarding the challenge to the vires of Rule 5 of the 1997 Rules in the High Court, the Court declined to entertain this challenge in the present appeals. The Court clarified that the assessees could not raise a new legal challenge at this juncture when it was not previously brought before the lower courts. The Court refrained from commenting on the merits of the pending petition(s) challenging Rule 5 in the High Court.

4. The Court deliberated on the permissibility of introducing new legal challenges at different stages of the appeal proceedings. Despite acknowledging that some assessees had chosen to challenge the validity of Rule 5 in the High Court, the Court maintained that such challenges should have been raised before the lower courts. Ultimately, following the precedent set in the Doaba Steel Rolling Mills case, the Court allowed the appeals, overturned the impugned judgments, and directed each party to bear their own costs.