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of <h1>Tribunal allows challenge to demands without contesting initial determination. High Court rules on capacity determination.</h1> <h3>M/s SAMARTH KNITTERS PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE</h3> M/s SAMARTH KNITTERS PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE - TMI Issues:Challenge to demands based on capacity determination rules under Central Excise, consideration of length of galleries in fixing stenter capacity, right to challenge demands without challenging capacity fixation order.Analysis:The appellant, engaged in textile fabric processing, appealed against an Order-in-Appeal by the Commissioner of Central Excise regarding demands made following the annual capacity determination of the stenter. The appellant contested the demands, arguing that the length of galleries should not be a factor in determining stenter capacity.The adjudicating authority initially dismissed the proceedings, but the revenue appealed. The Commissioner (Appeals) overturned the adjudication order, stating that since the appellant did not challenge the capacity fixation order by the Commissioner of Central Excise, they could not dispute the consequential demands.However, the Tribunal referred to a decision by the Hon'ble Bombay High Court in the case of Mahalaxmi Dyeing & Ptg. Pvt. Ltd. vs. Union of India, where it was held that the issue of considering the length of galleries in fixing stenter capacity had been settled by the Hon'ble Supreme Court. The High Court ruled that the length of galleries should not be a factor in capacity determination, allowing the assessee to challenge demands based on this ground even without challenging the original capacity fixation order.Based on the High Court's decision, the Tribunal set aside the impugned order and allowed the appeal, recognizing the appellant's right to challenge the demands despite not contesting the initial capacity determination by the Commissioner of Central Excise.
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