2017 (1) TMI 229 - AT - Central Excise

Determination of annual production - whether the order of the Commissioner fixing Annual Capacity of Production is an appellable order - Held that - Hon ble High Court of Gujarat at Ahmedabad in the case of Premraj Dyeing & Printing Mills Pvt. Ltd (supra), we hold that the order of Commissioner determining Annual Production Capacity is not an appellable order and therefore failure to file an appeal against the said order cannot be held as ground for rejecting the claim. The only ground of appeal by Revenue before Commissioner 2013 (6) TMI 118 - GUJARAT HIGH COURT was that the order dated 13.10.1999 passed by Commissioner determining Annual Capacity of Production has not been challenged and therefore the refund should be rejected - Appeal allowed.

Summary

Issues:
1. Whether the order of the Commissioner determining Annual Production Capacity is appellable.
2. Whether failure to challenge the order of the Commissioner determining the production capacity bars the right to appeal against subsequent demands.
3. Imposition of penalty by the Commissioner (Appeals).

Analysis:

Issue 1:
The primary question is whether the order of the Commissioner determining the Annual Production Capacity is subject to appeal. The Tribunal referred to the decision of the Hon'ble High Court of Gujarat at Ahmedabad in the case of Premraj Dyeing & Printing Mills Pvt. Ltd. The Court observed that the determination of production capacity is an administrative exercise and not a quasi-judicial order. The Rules do not provide for any appeal against this determination. Therefore, the Tribunal concluded that the order is not appealable.

Issue 2:
The Tribunal considered the argument raised by the Revenue that failure to challenge the Commissioner's order determining the production capacity precludes the right to challenge subsequent demands. However, the Tribunal relied on the decision of the Hon'ble High Court of Bombay in the case of Mahalaxmit Dyeing & Ptg (I) Pvt. Ltd. The Court held that the failure to appeal against the capacity determination order does not prevent the right to claim a refund of excess duty collected. The Tribunal emphasized that the determination of the production capacity is not an appellable order, and therefore, the failure to challenge it does not affect the right to contest demands based on it.

Issue 3:
The Commissioner (Appeals) had imposed a penalty of ?3,70,000 on the assessee. The Tribunal did not provide a detailed analysis of this penalty imposition in the judgment summary.

In conclusion, the Tribunal allowed the appeal based on the findings that the order of the Commissioner determining the Annual Production Capacity is not appealable, and failure to challenge this order does not bar the right to contest subsequent demands. The decision was in line with the precedents set by the Hon'ble High Courts of Gujarat at Ahmedabad and Bombay.