2008 (5) TMI 219 - HC - Central Excise

Commissioner determined the annual production capacity (APC) of the furnance at 3.2. MT on the basis of the capacity of the induction furnance recorded in the invoice of the supplier of the furnance - Rule 3(2) of the Induction Furnance Annual Capacity Determination Rules of 1997 are not attracted in the present case and as such determining the APC on the basis of any other material, i.e. certificate of the Chartered Engineer etc. or on the basis of sanctioned load of electricity cannot be made

Summary

Issues:
Capacity determination of Induction Furnace under Central Excise Act 1944.

Analysis:
1. The petitioner, a company engaged in manufacturing M.S Ingots, challenged the determination of annual production capacity of their Induction Furnace by the Commissioner and Tribunal. The petitioner claimed their furnace capacity should be considered as 2.6 MT due to insufficient electricity load, contrary to the determined 3.2 MT based on supplier's invoice.

2. The petitioner filed a reference petition under Section 35(H)(I) of the Central Excise Act, 1944, questioning the Tribunal's decision. The main legal issue was whether the Tribunal was justified in rejecting the petitioner's plea regarding the capacity determination of the furnace under Rule 3(2) of the Induction Furnace Annual Capacity Determination Rules, 1997.

3. The petitioner's counsel argued that the authorities should have considered the sanctioned power load and the Chartered Engineer's certificate to determine the capacity at 2.6 MT. On the other hand, the respondents argued that the capacity was correctly determined based on supplier invoices, emphasizing that under Rule 3(2), the capacity should be ascertained based on available documents or comparable furnaces' capacity.

4. The Court examined Rule 3 of the Induction Furnace Annual Capacity Determination Rules, 1997, which provides the mode for determining furnace capacity. It was noted that the capacity should be based on documents or invoices, and if unavailable, comparable furnace capacity can be considered. The Court found that since the supplier's invoice indicated a capacity of 3.2 MT, the petitioner's argument based on electricity load or engineer's certificate was not valid.

5. The Court concluded that the provisions of Rule 3(2) were not applicable in this case, as the furnace's capacity was established at 3.2 MT by the supplier's invoice. The petitioner's failure to utilize the full capacity did not alter the determined capacity. The Court dismissed the petition, finding no error in the Commissioner's and Tribunal's orders, stating that no substantial legal question arose from the case.