2018 (6) TMI 998 - HC - Central Excise

Annual Capacity based production - The Department s main grievance appears to be that the communication which the manufacturer challenged was not an order which is appealable and the fixation of annual production capacity was not challenged by him - Whether in the facts and circumstances of the case, the Tribunal was justified in entertaining an appeal against the letter of the Deputy Commissioner dated 27.02.2001 which is not an appealable order under Section 35B of the Central Excise Act? - Whether in the facts and circumstances of the case, is the Tribunal justified in remanding the matter to the Commissioner to refix annual capacity of production despite there being no challenge to the order of refixation of annual production capacity and determination of pro rata duty liability? Held that - The respondent did not give up challenge for fixation of appropriate annual production capacity. Part of the request was even granted by the Department. When such capacity was refixed by an order dated 8th February 2000, even then the assessee was not satisfied. This was not just the case of delayed approach to the Tribunal. Tax appeal dismissed.

Summary

Issues:
Challenge to Tribunal's judgment by Department regarding appealability of the order and remand for refixation of annual production capacity.

Analysis:
The case involved a challenge by the Department against the judgment of the Customs, Excise & Service Tax Appellate Tribunal. The respondent, a manufacturer of textile products, had applied for fixation of annual production capacity under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 2000. The Deputy Commissioner determined the annual production capacity, which was later redetermined due to changes made by the manufacturer. The manufacturer continued to dispute the determination and filed an appeal in the Tribunal. The Tribunal remanded the matter for refixation of annual production capacity based on a Supreme Court judgment that length of galleries cannot be considered in such determinations.

The first issue raised was whether the Tribunal was justified in entertaining an appeal against the Deputy Commissioner's letter, which the Department argued was not appealable under Section 35B of the Central Excise Act. The Court noted that the respondent did not give up the challenge for the fixation of the annual production capacity, even though part of the request was granted by the Department. The Court found that the respondent was essentially challenging the fixation of the annual production capacity, and therefore, upheld the Tribunal's decision to entertain the appeal.

The second issue was whether the Tribunal was justified in remanding the matter for refixation of annual production capacity despite no challenge to the original order. The Court held that the respondent's dissatisfaction with the capacity determination was evident throughout the proceedings, even after a redetermination was made. The Court found no error in the Tribunal's decision to remand the matter for refixation, especially considering the Supreme Court judgment that favored the assessee. Consequently, both questions were answered against the Revenue, and the Tax Appeal was dismissed.