Appeal before the High Court / Supreme Court - Whether determination of Production Based Capacity based duty is a question of law or question of fact?

The issue involved in this appeal is as to how the deemed annual production in terms of Section 3A of the Central Excise Act, 1944 which was brought into force with effect from 14.05.1987 should be determined.

Appellant herein installed an induction furnace, the capacity whereof was 8 M.Ts.  It had asked the Gujarat State Electricity Board (Board) for supply of 3000 KVA of electrical energy.  The Board agreed to supply only 1900 KVA input of power.  The said furnace was manufactured by Inductotherm (India) Ltd.  Keeping in view the fact that the appellant could not obtain supply the requisite quantity of electrical energy, it thought of reducing the capacity of the said induction furnace.  According to it, the capacity was brought down to 4 = M.Ts from 8 M.Ts.  Appellant contends that the Department was informed thereabout.  Allegedly, an inspection was carried out and the capacity of the said induction furnace was also noticed by the inspecting team.  Despite the same, a show cause notice was issued as to why the deemed annual production should not be determined on the basis that the capacity of the said furnace was 8 M.Ts.  A finding of fact was arrived at by the concerned authorities that the capacity of the said furnace was 8 M.Ts, and not 4 = M.Ts.

The view of the department has been confirmed by the honorable tribunal. Aggrieved by the order of Tribunal, appellant has preferred an appeal before the High Court has rejected the appeal of the appellant on the ground that there is no question of law is involved in the matter.

Relevant portion of Section 35G of the Central Excise Act, 1944, is read as under:

"35G. Appeal to High Court

(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law."

Against the order of the honorable HC, appellant has preferred an appeal before the Supreme Court for correct determination of capacity. But, honorable Supreme Court has also rejected the appeal on the ground that no question of law is involved.

Tribunal is the final fact finding authority and the findings of the Tribunal attains the finality where no question of law is involved. 

(For full text of judgment - visit 2007 -TMI - 2208 - Supreme Court of India