2000 (12) TMI 116 - AT - Central Excise

Summary

Issues involved: Determination of annual capacity of production for duty payment in a steel rolling mill u/s 3A of Central Excise Act, 1944, and the application of Rules 3, 4, and 5 of the Hot Rolling Steel Mills Annual Capacity Determination Rules, 1997 in cases of machinery changes.

Summary:
1. The case involved a steel rolling mill whose annual capacity was initially determined at 3154.253 MT but later recalculated to 3488.535 MT due to changes in machinery, resulting in a higher capacity than the deemed capacity based on 1996-97 production.

2. The appellant contested the application of Rule 5, arguing it was not applicable when annual capacity is re-determined under Rule 4(2) due to machinery changes, citing previous Tribunal decisions in support.

3. The Tribunal deliberated on whether Rule 5 applies to cases of re-fixing production capacity under Rule 4(2) due to machinery changes, considering the formula in Rule 3 for capacity determination and the deeming provision in Rule 5 based on actual production of 1996-97.

4. It was concluded that Rule 5 is relevant in cases where annual capacity remains the same or increases due to machinery changes, but not when machinery changes lead to a reduction in annual capacity as per Rule 3 parameters.

5. The Tribunal emphasized the importance of following the relevant Rules for capacity determination, highlighting that Rule 5 is applicable in specific scenarios to ensure fair and accurate duty payment based on production capacity.

6. The appeal was dismissed based on the interpretation of Rules and previous Tribunal decisions, affirming the application of Rule 5 in cases where machinery changes do not reduce the annual production capacity determined under Rule 3.