2001 (2) TMI 493 - AT - Central Excise

Summary

Issues involved:
1. Determination of annual capacity of production for re-rolling mills.
2. Classification of furnace as pusher type.
3. Demand of duty under Section 11A of the Act.
4. Expert opinion as the basis for classification.
5. Scope of the show cause notice and subsequent duty payment.

Detailed Analysis:
1. The judgment revolves around the determination of the annual capacity of production for re-rolling mills. The Commissioner re-determined the annual capacity at 2536 MTs for the year 1997-98 based on utilised hours of 2400 applicable to pusher type furnace under the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997. This determination led to a confirmed demand of Rs. 2,21,900 for a specific period under Section 11A of the Act.

2. The key issue in the case was the classification of the furnace as a pusher type. The Commissioner, after getting the furnace inspected by technical experts, concluded that the appellants had installed a pusher type furnace in their factory. The expert report highlighted various observations supporting this classification, such as the presence of a pushing mechanism for material charging and movement within the furnace. The appellants did not challenge this classification during the hearing.

3. The judgment also addressed the demand of duty under Section 11A of the Act. While upholding the determination of annual capacity based on the pusher type furnace classification, the tribunal limited the demand to Rs. 2,21,900 for the specific period mentioned in the show cause notice. The tribunal found merit in the argument that the demand should not extend to subsequent periods without proper notice.

4. The reliance on expert opinion played a crucial role in the classification of the furnace. The tribunal accepted the expert findings and emphasized the importance of technical expertise in determining the nature of the furnace. This acceptance of expert opinion reinforced the classification of the furnace as a pusher type, influencing the overall decision on the annual capacity determination.

5. Regarding the scope of the show cause notice and subsequent duty payment, the tribunal set aside the directive for the appellants to pay duty for the subsequent period by treating the furnace as a pusher type. The tribunal directed that pending show cause notices should be separately adjudicated by the Jurisdictional Commissioner, emphasizing procedural fairness and proper notification in matters of duty payment.

In conclusion, the judgment provided a detailed analysis of the issues related to the determination of annual production capacity, classification of the furnace, demand of duty, reliance on expert opinion, and procedural fairness in notice and duty payment directives.