1999 (9) TMI 316 - AT - Central Excise

Issues Involved:
1. Determination of the annual capacity of production of the appellant's induction furnace.
2. Validity and authenticity of the manufacturer's invoice used to determine the furnace capacity.
3. Authority of the Commissioner to re-determine the production capacity based on actual production trials.
4. Legal provisions and limitations under Section 3A of the Central Excise Act, 1944, and related rules.

Detailed Analysis:

1. Determination of the Annual Capacity of Production:
The appeal arises from the Order-in-Original No. 3/99, dated 25-1-1999, where the Commissioner re-determined the annual capacity of the appellant's induction furnace under Section 3A of the Central Excise Act, 1944, and Notification 20/97-C.E. (N.T.), dated 25-8-1997, prescribing Induction Furnace Annual Capacity Determination Rules, 1987. The original capacity was fixed at 2.50 MTs based on the manufacturer's invoice and technical consultation with a Chartered Engineer.

2. Validity and Authenticity of the Manufacturer's Invoice:
The appellant submitted an authenticated copy of the manufacturer's invoice from 1985. The Commissioner initially accepted this invoice and fixed the capacity at 2.50 MTs. However, subsequent visits and production trials by the Commissionerate officers revealed higher actual production, leading to a show-cause notice alleging mis-declaration of capacity. The Commissioner then re-determined the capacity, doubting the invoice's authenticity and suggesting possible changes in the furnace.

3. Authority of the Commissioner to Re-determine Production Capacity:
The appellant argued that the Commissioner's re-determination was based on conjecture and lacked evidence. The rules mandate the Commissioner to rely on the manufacturer's invoice unless proven fraudulent. The appellant contended that there was no provision for the Commissioner to re-determine capacity based on actual production trials without evidence of fraud or unauthorized changes to the furnace.

4. Legal Provisions and Limitations under Section 3A:
The Tribunal noted that Section 3A of the Central Excise Act and related rules are based on deemed or estimated capacity, not actual capacity. The rules require the Commissioner to determine capacity based on the manufacturer's invoice unless there is evidence of fraud. The Tribunal found no provision allowing the Commissioner to re-determine capacity based on actual production trials. The appellant fulfilled their duty by providing the invoice, and there was no evidence of fraud or unauthorized changes to the furnace.

Conclusion:
The Tribunal concluded that the Commissioner had no authority to re-determine the capacity based on actual production trials without evidence of fraud or unauthorized changes. The original capacity determination based on the manufacturer's invoice was valid. The Tribunal set aside the Order-in-Original and allowed the appeal with consequential relief to the appellants as per law.

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