2001 (2) TMI 229 - AT - Central Excise

Summary

Issues Involved:
1. Whether assessees who opted for the procedure under Rule 96ZO(3) can opt out and claim determination of production under Section 3A(4) of the Central Excise Act.
2. Method of determination of annual capacity of production under Rule 96ZO(3).

Issue-wise Detailed Analysis:

Issue No. 1: Opting Out of Rule 96ZO(3) Procedure

The first issue revolves around whether iron and steel rolling mills that have chosen the procedure under Rule 96ZO(3) can later opt out and seek determination of production under Section 3A(4). This issue is guided by the Supreme Court judgment in Commissioner of Central Excise v. Venus Castings P. Ltd., which states that Section 3(A)(4) and Rule 96ZO(3) are alternative procedures. An assessee can switch from Rule 96ZO(3) to Rule 96ZO(1) for a subsequent period, but cannot mix procedures. Despite pending writ petitions in various High Courts, the Supreme Court's judgment is binding. The Tribunal clarified that opting out is effective from the first of the succeeding month, not the next financial year, as the duty liability is monthly.

Issue No. 2: Determination of Annual Capacity of Production

The second issue pertains to the method of determining the annual capacity of production under Rule 96ZO(3). This is settled by previous Tribunal decisions in Arihant Steels and Ganpati Industries, which held that the capacity shown in the manufacturer's invoice should be the basis. Rule 3 of the Induction Furnace Annual Capacity Determination Rules, 1997, supports this, stating that the Commissioner's determination should rely on the manufacturer's invoice. If unavailable, the Commissioner may use comparable furnace data or consult technical authorities. Therefore, the Tribunal upheld that the manufacturer's invoice is the primary basis for determining the annual capacity.

Individual Appeals:

1. M/s. Ranjeev Alloys Ltd.:
- Opted under Rule 96ZO(3) without revocation.
- Disputed ACP determination and claimed unit closure from 26-11-1997.
- Remanded for fresh determination of capacity and verification of closure.

2. M/s. Meenakshi Castings:
- Opted out on 24-3-1998.
- ACP to be determined by the manufacturer's invoice for the period before 1-4-1998 and actual production thereafter.
- Remanded for redetermination.

3. M/s. Inder Steels P. Ltd:
- Opted out on 1-5-1998.
- ACP to be determined by manufacturer's invoice before 1-5-1998 and actual production thereafter.
- Remanded for redetermination.

4. M/s. Deepak Castings P. Ltd:
- Opted out on 22-5-1998.
- ACP to be determined by manufacturer's invoice before 1-6-1998 and actual production thereafter.
- Remanded for redetermination.

5. M/s. Vikky Castings P. Ltd.:
- Opted out on 12-1-1998.
- ACP to be determined by manufacturer's invoice before 1-2-1998 and actual production thereafter.
- Remanded for redetermination.

6. M/s. U.P. Alloys P. Ltd.:
- Opted out on 1-6-1998.
- ACP to be determined by manufacturer's invoice before 1-7-1998 and actual production thereafter.
- Remanded for redetermination.

7. M/s. Venus Loha Udyog:
- Opted out on 9-1-1998.
- ACP to be determined by manufacturer's invoice before 1-2-1998 and actual production thereafter.
- Remanded for redetermination.

8. M/s. Shivangi Steels P. Ltd.:
- Opted out on 15-4-1998.
- ACP to be determined by manufacturer's invoice before 1-5-1998 and actual production thereafter.
- Remanded for redetermination.

9. M/s. Venus Castings P. Ltd:
- Did not opt out and did not dispute ACP determination.
- Appeal rejected due to lack of evidence for factory closure.

10. M/s. Avadh Alloys P. Ltd.:
- Did not opt out and did not dispute ACP determination.
- Appeal rejected.

11. M/s. C.V. Steels:
- Opted out on 7-4-1998.
- ACP to be determined by manufacturer's invoice before 1-5-1998 and actual production thereafter.
- Remanded for redetermination.

12. M/s. Shree Jagadambay Castings P. Ltd.:
- Opted out on 23-5-1998.
- ACP to be determined by manufacturer's invoice before 1-6-1998 and actual production thereafter.
- Remanded for redetermination.

13. M/s. Panem Castings P. Ltd.:
- Claimed to opt out on 16-1-1998, disputed by the Department.
- Remanded for verification of the letter and redetermination if verified.

Conclusion:

The Tribunal directed the jurisdictional Commissioner to pass fresh orders after allowing the assessees a reasonable opportunity to be heard. The appeals were disposed of in the above terms.