1997 (10) TMI 81 - HC - Central Excise

Summary

Issues:
1. Determination of annual capacity of petitioner's unit under Hot Re-rolling Mills Annual Capacity Determination Rules, 1997.
2. Discrepancy in the determination of factor (d) for excise duty calculation.
3. Provisional determination of annual capacity by the Commissioner of Central Excise.
4. Obligation of the Commissioner to make final determination of annual capacity.
5. Petitioner's request for re-verification of factor (d) and final order issuance.
6. Applicability of the formula for determining annual capacity of production of hot re-rolled products.
7. Commissioner's duty to determine total capacity and annual production capacity of hot re-rolling mill.
8. Need for notice to petitioner before final determination by the Commissioner.
9. Timeframe for final determination by the Commissioner.
10. Payment of duty based on provisional determination pending final determination.

Analysis:
The petition sought a Writ of Mandamus to direct the respondents to redetermine the annual capacity of the petitioner's unit as per the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997, based on the application and verification of distances in the finishing mill at the factory. The petitioner, engaged in manufacturing M.S. Cold Twisted Deformed bars, faced a discrepancy in the determination of the annual capacity, leading to a substantial liability due to the incorrect factor (d) used for excise duty calculation. The Commissioner provisionally determined the annual capacity based on a report without notifying the petitioner, prompting the need for a final determination after considering objections raised by the petitioner.

The formula for determining annual capacity of hot re-rolled products relies on various factors, including the nominal diameter of the finishing mill (d), revolutions per minute, reduction ratio, weight per meter, and utilized hours. The (d) factor holds significance in fixing the excise duty liability. The Commissioner is obligated to determine the total and annual capacity of the hot re-rolling mill, with provision for provisional determination pending verification. However, a final determination must follow after considering all relevant factors, ensuring a fair assessment of the production capacity.

Acknowledging the provisional nature of the determination made without petitioner's notice, the court directed the Commissioner to notify the petitioner for inspection to note the (d) factor accurately and address any raised objections before making a final determination. The court emphasized the importance of considering all relevant factors, including marketing points at the roughing and finishing mills, in determining the annual production capacity. A timeline of one month was set for the Commissioner to finalize the determination post the court's order receipt.

While the petitioner's request to pay duty based on their provided (d) factor was rejected, they were instructed to adhere to the duty amount determined provisionally by the Commissioner until the final determination is made. The writ petition was disposed of accordingly, ensuring a fair and transparent process for determining the annual capacity and excise duty liability of the petitioner's unit.