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of <h1>Supreme Court overturns tribunal decision on central excise rules, upholds validity of Rule 3</h1> <h3>COMMISSIONER OF CENTRAL EXCISE Versus ROOP TEXTILES MILLS LTD.</h3> COMMISSIONER OF CENTRAL EXCISE Versus ROOP TEXTILES MILLS LTD. - TMI Issues:Challenge to tribunal's judgment on annual capacity determination rules under Central Excise Act.Analysis:The Revenue challenged the tribunal's judgment which allowed the appeal of the respondent assessee based on the decision of the Madras High Court regarding the annual capacity determination rules framed under the Central Excise Act. The tribunal held the notification framing the rules as ultra vires Section 3A of the Act. Consequently, the tribunal set aside the Commissioner(Appeals)'s order and remanded the proceedings for fresh orders after providing a reasonable opportunity of hearing to the appellants.The appeal was initially dismissed by the Court, but the Revenue appealed against this dismissal. The Supreme Court later admitted the Tax Appeal, framing the question of law as to whether the rule in question was ultra vires Section 3A of the Central Excise Act. However, the Court felt that the question needed reframing to capture the full controversy, leading to a new question regarding the correctness of CEGAT's decision in light of the Madras High Court judgment.The appellant's counsel argued that the tribunal erred in following the Madras High Court decision, which declared the rules as ultra vires, specifically Rule 3. The counsel highlighted that the rules changed the basis of valuation for central excise from clearance value to annual production capacity, leading to charges against the assessee. The counsel also referenced a Division Bench judgment upholding the validity of the rules, emphasizing the provision for refund in cases of production below the determined annual capacity.Based on the above arguments and the Division Bench judgment, the Court concluded that the tribunal's decision could not be sustained. Therefore, the tribunal's judgment was set aside, and the orders of the adjudicating authority and appellate commissioner were restored in favor of the Revenue. The Tax Appeal was disposed of accordingly, answering the question in favor of the Revenue.
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