Ordinary production test under excise notification supports special levy where ingot output is not merely incidental.

An induction furnace unit producing both steel castings and non-alloy steel ingots fell within the special levy regime because the exclusion in Notification No. 30/97-C.E. (N.T.) applied only where castings were ordinarily produced and ingots arose merely incidentally. The ordinary character of production could be determined from output data, and comparable production of castings and ingots showed that ingot manufacture was not merely incidental. The unit was therefore not entitled to assessment under the normal duty regime and liability under Section 3A was correctly upheld.

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Issues: Whether an induction furnace unit manufacturing both steel castings and non-alloy steel ingots was liable to pay duty under Section 3A of the Central Excise Act or under Section 3 of the Central Excise Act, having regard to the exclusion for a unit which ordinarily produces castings but may incidentally produce non-alloy steel ingots and billets.

Analysis: Notification No. 30/97-C.E. (N.T.) brought non-alloy steel ingots and billets within the Section 3A regime, but its Explanation excluded an induction furnace unit which ordinarily produces castings or stainless steel products and only incidentally produces non-alloy steel ingots and billets. The determining question was therefore whether ingots were produced only incidentally or whether the unit was in substance ordinarily producing ingots. The quantity of output was treated as a valid criterion for deciding the nature of ordinary production. On the figures available, the production of ingots and castings during the relevant period was substantially comparable, and it could not be said that ingots were being produced merely incidentally.

Conclusion: The unit was not entitled to be assessed under Section 3 merely on the footing that ingot production was incidental, and liability under Section 3A was correctly upheld. The appeal was rejected.

Final Conclusion: The exclusion from the special levy applied only to units ordinarily producing castings with merely incidental ingot production, and on the facts found the respondent did not satisfy that description.

Ratio Decidendi: Where a fiscal notification excludes units that ordinarily produce castings but only incidentally produce non-alloy steel ingots, the ordinary character of production may be determined by production data, and comparable output of castings and ingots justifies treatment under the special levy rather than the normal duty regime.

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