2018 (3) TMI 1383 - HC - Central Excise

Whether Hon ble Tribunal is correct in concluding that Rule 5 will not be applicable when there is change in the parameters resulting in less production when there is no specific condition in the said Rules ibid that Rule would be applicable only to enhanced or when there is no change in the parameters of the furnace? Is not the formula following as per sub rule (3) of Rule 3 in respect of annual capacity determined basing on the production during the relevant period sustainable or not? Held that - the subject matter is pending on the file of the Hon ble Supreme Court, instant civil miscellaneous appeal is disposed of, giving liberty to the appellant, to take appropriate decision, if so warrants, after the outcome of the decision, in the reference made.

Summary

Issues:
1. Interpretation of Rule 5 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 (HRRSMACDR'97) regarding change in parameters affecting production capacity.
2. Sustainability of the formula under sub rule (3) of Rule 3 for determining annual capacity based on production during the relevant period.

Analysis:
1. The case involved a dispute regarding the application of Rule 5 of the HRRSMACDR'97 when there was a change in the parameters of a steel re-rolling mill resulting in reduced production capacity. The appellant contested the conclusion of the Hon'ble Tribunal that Rule 5 would not apply in cases of decreased production capacity due to parameter changes. The appellant argued that Rule 5 states that if the capacity determined is less than actual production, it should be equal to the production of the base year. The appellant emphasized that Rule 5 does not specify that it is only applicable to enhancements or unchanged parameters, thereby challenging the Tribunal's interpretation.

2. The second issue revolved around the sustainability of the formula under sub rule (3) of Rule 3 for determining the annual capacity based on production during the relevant period. The appellant cited a Supreme Court order dismissing a Special Leave Petition (SLP) filed by the Steel Re-rollers Council, Erode, challenging the validity of Rule 5 of HRRSMACDR'97. The appellant argued that since the Supreme Court upheld the validity of Rule 5 and stayed the High Court's order, the impugned orders of CESTAT should be set aside. The appellant highlighted the delay in the case reaching the High Court due to pending reference to a Larger Bench decision in the Supreme Court, leading to a disposal of the civil miscellaneous appeal with liberty to the appellant to make decisions post the Supreme Court's decision.

In conclusion, the judgment addressed the conflicting interpretations of Rule 5 of HRRSMACDR'97 and the sustainability of the formula for determining annual capacity, emphasizing the need to await the outcome of the pending reference to a Larger Bench decision in the Supreme Court before making further decisions.