2020 (2) TMI 1024 - HC - Central Excise

Maintainability of appeal - Whether the orders of the Appellate Tribunal confirming recovery of duty on the basis of Annual Production Capacity (APC) and not on the basis of actual production are correct and legal in the facts of this case? - HELD THAT - The appeal is admitted on substantial question of law. The facts as emerging on record reveal that the question on which the appeal has been admitted does not arise either from the order passed by the Commissioner, Central Excise and Customs, Ahmedabad-II or the CESTAT as neither the Commissioner nor the CESTAT has considered the issue of recovery of duty on the basis of actual production. The question framed as a substantial question of law arising from the impugned order passed by the CESTAT is not answered - appeal dismissed.

Summary

Issues involved:
1. Appeal against order passed by Customs, Excise and Service Tax Appellate Tribunal.
2. Determination of Annual Capacity of Production (ACP) for a steel rolling mill.
3. Interpretation of Rule 4 of Hot Re-Rolling Mills Annual Capacity Determination Rules 1997.
4. Dispute regarding the capacity calculation of a factory with two rolling mills.
5. Appeal questioning recovery of duty based on Annual Production Capacity (APC) instead of actual production.
6. Consideration of substantial questions of law raised in the appeal.

Issue 1: Appeal against order passed by Customs, Excise and Service Tax Appellate Tribunal
The appellant filed an appeal against the order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Appeal No. E/2740/98-Bom dated 22.03.2004, as well as the order in the rectification application in Appeal No. E/2740/98/2869/04 dated 04.01.2005. Both the appeal and the rectification application were dismissed by the CESTAT, leading to the appellant's dissatisfaction with the decision.

Issue 2: Determination of Annual Capacity of Production (ACP) for a steel rolling mill
The appellant, a steel rolling mill, filed a declaration under section 3A of the Central Excise Act, 1944, for the determination of the Annual Capacity of Production (ACP). The dispute arose regarding the capacity calculation of the factory, specifically concerning the operation and utilization of two rolling stands corresponding to each furnace within the mill. The Commissioner determined the factory's capacity based on the presence of two mills, leading to disagreement and subsequent appeal by the appellant.

Issue 3: Interpretation of Rule 4 of Hot Re-Rolling Mills Annual Capacity Determination Rules 1997
The Tribunal interpreted Rule 4 of the Hot Re-Rolling Mills Annual Capacity Determination Rules 1997, emphasizing the requirement to determine the total capacity of hot rolling mills installed in a factory. The Tribunal held that in cases where a factory has multiple rolling mills, the total capacity should be determined by assessing the individual capacity of each mill separately and then aggregating the figures. This interpretation was crucial in resolving the dispute regarding the capacity calculation of the appellant's factory.

Issue 4: Dispute regarding the capacity calculation of a factory with two rolling mills
The dispute centered around the calculation of the factory's capacity, considering the presence of two rolling mills. The appellant argued that the second mill was not operational for several years and was used sparingly for specific purposes. However, the Tribunal, based on the interpretation of relevant rules, maintained that the capacity determination should account for all installed mills, irrespective of their individual utilization levels. This disagreement formed the crux of the legal battle between the appellant and the authorities.

Issue 5: Appeal questioning recovery of duty based on Annual Production Capacity (APC) instead of actual production
The appellant raised substantial questions of law in the appeal, challenging the recovery of duty based on Annual Production Capacity (APC) rather than actual production. The appellant contended that the recovery should align with the actual production levels, questioning the correctness and legality of the Tribunal's decision. However, the Tribunal's order and subsequent considerations did not address the issue of recovery based on actual production, leading to the dismissal of the appeal on this ground.

Issue 6: Consideration of substantial questions of law raised in the appeal
The appeal involved the consideration of substantial questions of law, including the correctness and legality of recovery based on Annual Production Capacity (APC) and the Tribunal's adherence to previous decisions. However, the formulated substantial question of law did not directly arise from the orders passed by the Commissioner or the CESTAT, resulting in the dismissal of the appeal on procedural grounds. The failure to establish a direct link between the formulated question and the impugned orders led to the unfavorable outcome for the appellant.

This comprehensive analysis of the legal judgment highlights the key issues, interpretations, disputes, and procedural aspects involved in the appeal against the order passed by the Customs, Excise and Service Tax Appellate Tribunal regarding the determination of Annual Capacity of Production for a steel rolling mill.