2001 (5) TMI 362 - AT - Central Excise

Summary

Issues:
1. Enhancement of annual production capacity by the Commissioner after a year.
2. Legality of the show cause notice for revision of annual capacity.
3. Application of Rule 5 for determining annual capacity.
4. Review of Commissioner's own order.
5. Allegation of time-barred show cause notice.

Issue 1: Enhancement of annual production capacity by the Commissioner after a year.

The appellants, engaged in manufacturing rods and flats under Chapter 72 of the Central Excise Tariff Act, had their annual production capacity fixed by the Commissioner based on a joint verification report. However, almost a year later, they were issued a show cause notice proposing an increase in their annual capacity of production. The notice also sought to impose penalties and recover interest for non-payment of duties during the relevant period.

Issue 2: Legality of the show cause notice for revision of annual capacity.

The appellants contended that the subsequent show cause notice for revising the annual production capacity amounted to a review of the Commissioner's own order, which they argued was impermissible under the law. They emphasized that the Commissioner had all relevant facts before him when initially fixing the annual capacity, and paying duties accordingly. The appellants cited a Tribunal decision to support their position that there was no provision empowering the Commissioner to re-determine the production capacity.

Issue 3: Application of Rule 5 for determining annual capacity.

The Revenue, represented by the JDR, argued that Rule 5 of the relevant Rules mandated that if the actual production exceeded the initially determined annual capacity, the capacity would be deemed equal to the actual production. The JDR contended that no formal order was needed for this adjustment, as the law automatically enhanced the production capacity under Rule 5.

Issue 4: Review of Commissioner's own order.

The Tribunal analyzed the application of Rules and the Commissioner's authority to review his own order. It was noted that the Commissioner had fixed the annual capacity under Rule 3, while the Revenue argued for the application of Rule 5. Relying on a previous decision, the Tribunal concluded that absent any suppression by the assessee, the Commissioner could not retrospectively review his order regarding the annual production capacity.

Issue 5: Allegation of time-barred show cause notice.

Regarding the limitation issue, the Tribunal found that the show cause notice issued after a year proposing duty recovery for specific periods was time-barred under Section 11A, as it exceeded the normal six-month limitation period. Since no suppression was alleged in the notice or found in the Commissioner's order, the Tribunal held the notice to be beyond the statutory limitation period, ruling in favor of the appellants.

In conclusion, the Tribunal disposed of the appeal in favor of the appellants, emphasizing the Commissioner's lack of authority to retrospectively review the annual production capacity order and ruling the show cause notice as time-barred due to exceeding the statutory limitation period.