2018 (9) TMI 573 - HC - Central Excise

Whether the Tribunal was right in directing the Commissioner to take into account the period during which the petitioner's factory was not in operative and the furnaces were not functioning while determining the Annual Capacity of Production (ACP) of the factory afresh? Held that - No substantial question of law arises for consideration in the instant case, as the dispute raised by the department is in a very narrow campus. On a reading of the Order-in-Original, it is evidently clear that the claim of the assessee was only for abatement. Therefore, the terminology which should have been used by the Tribunal in paragraph No.4 should have been abatement and not to direct redetermination of ACP of the assessee's factory afresh. In fact, the assessee's case is that during the period factory was shutdown and equipment was dismantled, the question of demanding the duty does not arise. No question of law has arisen for consideration, much less substantial question of law and only thing that requires to be clarified is, on remand, the Commissioner is directed to consider the case of abatement in accordance with Rule 96ZO(3) and other applicable provisions - appeal dismissed.

Summary

Issues:
1. Interpretation of Central Excise Rule 96ZO regarding factory closure and non-operation of furnaces in determining Annual Capacity of Production (ACP).
2. Application of Rule 96ZO of Central Excise Rules and Rule 3 of the Annual Capacity Determination Rules.
3. Authority of the Tribunal to direct redetermination of ACP without specific directions on duty and penalty implications.

Issue 1:
The main issue in this case was whether the Tribunal correctly directed the Commissioner to consider the period of factory inoperability and non-functioning furnaces when determining the Annual Capacity of Production (ACP) of the factory afresh. The appellant argued that Rule 96ZO only considers factory closure for a specific period, not non-functioning furnaces. The Tribunal's decision was based on the principles of natural justice and remanded the case for reconsideration by the Commissioner.

Issue 2:
The case involved the distinction between Rule 96ZO of the Central Excise Rules and Rule 3 of the Induction Furnace Annual Capacity Determination Rules. The appellant contended that the Tribunal failed to differentiate between the two rules, which operate on different factors. The respondent argued for abatement during the period of factory closure and non-operation of furnaces, emphasizing the need for specific directions on this matter.

Issue 3:
Regarding the Tribunal's authority to direct redetermination of ACP without clear instructions on duty and penalty implications, the Court found that the dispute was narrow. The Tribunal's direction should have focused on abatement rather than redetermination of ACP. The Court emphasized the need for the Commissioner to consider abatement in accordance with Rule 96ZO(3) and other relevant provisions, clarifying that no substantial question of law arose in the case.

In conclusion, the Court dismissed the Civil Miscellaneous Appeal, highlighting the importance of clarifying the abatement issue and directing the Commissioner to consider it appropriately. The judgment provided insights into the interpretation of relevant excise rules and the application of principles of natural justice in such cases.