1999 (4) TMI 186 - AT - Central Excise

Summary

Issues involved:
1. Determination of whether the assessee was manufacturing non-alloy steel ingots or incidentally producing them.
2. Interpretation of Rule 96ZO(3) regarding the exclusion from Section 3A of the Central Excise Act, 1944.
3. Assessment of the production pattern to ascertain the applicability of Section 3A(1) and the annual production capacity of the induction furnace.
4. Compliance with appellate directions and CBEC circulars in making the assessment.

Issue 1: Determination of manufacturing vs. incidental production:
The Commissioner assessed whether the assessee was manufacturing non-alloy steel ingots or incidentally producing them. The production pattern from previous years and the period under consideration were analyzed. The Commissioner concluded that the production figures did not support the claim of incidental production by the assessee, leading to the liability for assessment under Section 3A(1) of the Central Excise Act, 1944 as of September 1, 1997.

Issue 2: Interpretation of Rule 96ZO(3):
The appellants contended that they were excluded from Section 3A by virtue of the explanation clause of Rule 96ZO(3), stating that the production of non-alloy steel ingots was incidental to their main business of manufacturing castings. The appellants argued that the production figures of the relevant period showed non-alloy steel ingots were only a small percentage of total production, thus meeting the criteria for exclusion under Rule 96ZO(3).

Issue 3: Assessment of production pattern and furnace capacity:
The Department scrutinized the production figures to determine the annual production capacity of the induction furnace and directed the appellant to pay duty accordingly. The Commissioner considered the production trend of the preceding years to establish the normal production and incidental production of non-alloy steel ingots. The Tribunal examined whether it was necessary to consider the production pattern of the preceding years or confine the analysis to the relevant period from September 1997 to March 1998.

Issue 4: Compliance with appellate directions and CBEC circulars:
The appellants argued that the Commissioner should have followed the appellate directions and CBEC circulars, which excluded them from the purview of Section 3A. The Tribunal, after considering the submissions, interpretations of the term "incidental," and the production figures of the relevant period, concluded that the production of non-alloy steel ingots during the period in question was indeed incidental. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief as per the law.