2019 (3) TMI 1489 - AT - Central Excise

Valuation - annual capacity of production - whether the length of gallery be included in the Hot Air Stenter for determining the annual capacity of production under Section 3A of the Central Excise Act, 1944 for the period in dispute? - Held that - Identical issue decided in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS SPBL. LIMITED 2002 (9) TMI 113 - SUPREME COURT OF INDIA , where it was held that The Tribunal arrived at a conclusion that the Explanation to Rule 5 makes it clear that a float drying machine or any other equipments mentioned therein must be for aiding the process of heat setting or drying of fabrics. The Tribunal observed that a float drying machine is aiding the process of heat setting or drying of fabrics and other equipments contemplated by Explanation-I should also have like utility. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the length of the gallery should be included in the Hot Air Stenter for determining the annual capacity of production under Section 3A of the Central Excise Act, 1944 for the period in dispute.

Analysis:
The case involved an appeal against an Order-in-Appeal passed by the Commissioner of Central Excise, Mumbai-I, regarding the short payment of duty by the appellant during a specific period. The appellant contested the inclusion of the length of the gallery in the Hot Air Stenter for determining the annual production capacity. The appellant relied on a judgment of the Hon'ble Supreme Court in a similar case to support their argument. The Revenue, represented by the learned AR, supported the findings of the Commissioner (Appeals).

Upon analysis, the Tribunal considered the key issue of whether the length of the gallery should be included in the Hot Air Stenter for calculating the annual production capacity. The Tribunal referred to the judgment of the Hon'ble Supreme Court in a related case, which clarified that equipment attached to a stenter should aid the process of heat setting or drying of fabrics. The Tribunal concluded that a gallery without specific utility for heat setting or fabric drying should not be counted as a chamber in the stenter. The amended rules further clarified this interpretation, resolving any ambiguity caused by previous trade notices.

In light of the Supreme Court judgment and the interpretation of the rules, the Tribunal found no merit in the impugned order. Consequently, the Tribunal set aside the order and allowed the appeal, providing for consequential relief as per the law. The decision was pronounced in court, granting relief to the appellant based on the legal analysis and precedent set by the Supreme Court judgment.