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TMI Blog2012 (12) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year 1996-97 was determine under Sub-rule 3 of Rule 3 of the Annual Capacity Determination Rules 1997 framed in exercise of power conferred under Sub Section(2) of Section 3A of the Central Excise Act, 1944. As per the Clause5 of the notice, the allegation was that, though Annual Capacity of Production determined for the assessee's unit was 3044.531 metric ton but actual annual production in the mill of the assessee during the same financial year 1996-97, was 6095.795 metric ton. In the notice, it was stated that as such in terms of the provisions of the Rule 5 of the said Rules, the Annual Capacity of production for the purpose of levy of duty in terms of the Section 3A of the Central Excise Act, 1944 shall be deemed to be 6095.795 metric ton, and therefore, the assessee is required to pay the duty on the above quantity of the said goods instead of 3044.5 metric ton. Assessee submitted its reply to show cause notice and the order passed by the Assessing Officer dated 4.6.1999, it has been observed that the annual capacity of the production in the case of the assessee's unit was fixed 3044.531 metric ton and since the production in the assessee's mil was 6095.795 metric ton, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Rule3 that how the annual capacity of production of such mills will be determined. Sub Rule (3) of the Rule3 is as under: "( 3) the annual capacity of production of hot rerolled products of non-alloy steel in respect of such factory shall be deemed to be as determined by applying the following formula :Annual Capacity = 1.885 x 104 xdxnxixexwx Number of utilized hours (in metric tons) Where: d= Nominal centre distance of the pinions in the pinion stand in millimetres n= Nominal revolutions per minute (RPM) of the drive i= Reduction ratio of the gear box or of the pulley system or combination thereof w= Weight in Kilogramme per metre of the rerolled product the value of 'e' in the formula shall be deemed to be 0.30 in case of low speed mills, and 0.75 in case of high speed mills the value of 'w' factor in the formula for the high speed mills shall be deemed to be 0.45 and for the low speed mills shall be deemed to be as under:- Nominal Centre distance of the pinions in the pipion stand in millimetres w in kilogramme per metre Upto 110 0.100 111 to 160 0.150 161 to 210 0.395 211 to 260 0.888 261 to 310 1.200 311 to 360 2.466 361 to 410 4.850 Explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997-98 that the assessee was asked to show cause (a) as to why annual capacity for the payment of the levy of duty be not determined 6095.795 metric ton, (b) as to why the deferential duty not paid during the period September, 1997 to March, 1999 on account of annual capacity so determined be not recoverable from the assessee under Section 11A(1) of the Central Excise Act, 1944, (c) as to why the interest at the rate of 18 per cent per annum should not be recovered from the assessee under Rule 96 ZP(3) of the said Rules along with the outstanding amount of duty from the 11th day of the month of duty liability till the date of actual payment of the outstanding amount and (d) as to why a penalty equal to the amount of duty outstanding from him at the end of such month or Rs.5,000/whichever is greater be not recovered from the assessee under Rule 96 ZP(3) of the said Rules. There appears to be no dispute on facts in view of the fact that admittedly the annual capacity determined by the assessee under Sub Rule 3 of Rule 3 of the Rules of 1997 was 3044.531 metric ton against which the actual production of the petitioner's mill was 6095.795 metric ton. Rule 5 provides that if the actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules of 1997. To make it more clear, Rule 5 has been enacted, which provides that in case the annual capacity determined by the formula under sub-Rule 3 of Rule 3 in respect of a mill is less than the actual production by a mill during the financial year 1996-97, then annual capacity so determined shall be deemed to be the equal to the actual production of the mill during the financial year 1996-97. Therefore, duty leviable is according to the actual production in case if it exceeds the capacity of production determined under sub-Rule 3 of Rule 3. However, the language in Rule 5 declared that the actual production of the mill during the financial year 1996-97, if is more than the annual capacity of production determined, then that actual production shall be deemed to be annual capacity of production so determined under Rule 3(3) but it has been restricted for the year 1996-97 only. The Rule 5 is nowhere says that the said actual production shall be the annual capacity of production determined under sub-Rule 3 of Rule 3 for subsequent years. Therefore, for subsequent years, if the annual capacity of the production is required to be determined, then that can be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X
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