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2016 (12) TMI 479 - HC - Central ExciseWhether in absence of any permission from the Commissioner Central Excise for making changes the benefit of Rule 4 read with Rule 3 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules 1997 could be given to the assessee? - Held that - This very issue has now been finally set at rest by the Apex Court in the case of Commissioner of Central Excise, Chandigarh Vs. DOABA Steel Rolling Mills reported in 2011 (7) TMI 10 - SUPREME COURT OF INDIA wherein the Apex Court has come to the conclusion that Rule 5 of the 1997 Rules, is not fettered in any way by any restriction and can be invoked even in a case of determination of the annual capacity of production of the factory where there has been a change in the installed machinery or any part thereof - question stands answered in favor of the appellant-department and against the assessee - appeal allowed.
Issues involved: Appeal under Section 35-G of the Central Excise Act, 1944 regarding determination of duty based on re-determined annual capacity of production. Question of law: Whether benefit of Rule 4 read with Rule 3 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules 1997 could be given to the assessee without permission from the Commissioner Central Excise.
Analysis: The appeal before the Allahabad High Court involved a dispute regarding the Annual Capacity of Production (ACP) of a manufacturer of Hot Re Rolling products of Iron and Steel for the period from 24.12.1998 to 31.3.1999. The respondent had opted for the compounding scheme under Rule 96ZO (3) of the Central Excise Rules, 1994 for full and final discharge of their duty liabilities. The ACP was initially fixed at 2672.75 MT per annum. However, for the period in question, the ACP was determined at 2347.07 MT per annum by the Commissioner, Central Excise, Meerut-II. The matter was taken to the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, which set aside the Commissioner's order and remanded the case for fresh consideration. The Commissioner, Central Excise, passed an order reconfirming the ACP based on Rule 5, which deemed the ACP to be equal to the actual production of the mill during the financial year 1996-97. This decision was challenged by the respondent, leading to an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The Appellate Tribunal partly allowed the appeal, determining the duty liability for the period in question based on a re-determined annual capacity of production of 880.5 MT/annum. This decision was in line with the Apex Court's ruling in the case of Commissioner of Central Excise, Chandigarh Vs. DOABA Steel Rolling Mills, which clarified that Rule 5 of the 1997 Rules could be invoked even in cases of changes in installed machinery. Consequently, the question of law was answered in favor of the department, leading to the allowance of the present appeal by the High Court. In conclusion, the judgment highlighted the application of relevant rules and legal principles in determining duty liabilities based on the annual capacity of production, emphasizing the importance of compliance with regulations and the precedents set by higher courts in similar cases.
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