2015 (1) TMI 219 - HC - Central Excise

Dispute over Hot Re-rolling Steel Mill annual capacity determination rules

The Commissioner, Customs and Central Excise Versus M/s. Sifco Metal Industries

The case involved a dispute over determining the annual capacity of a Hot Re-rolling Steel Mill for the financial year 1998-99. The Hot Re-rolling Steel ... Determination of the annual capacity of Hot Re-rolling Steel Mill - Held that:- Figure that emerged on application of Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 is less than the actual production of the year 1996-97, a representation was made by Respondent raising two objections. The first was that the figures pertaining to 1996-97 included the scrap to an extent of 144.88 MTs., and that some changes of parameters, which have bearing upon the production capacity, were also introduced in the Mill. Omitting the rounds of litigation that have taken place till the latest of the orders were passed, it emerges that the fact that the scrap was included in the figures pertaining to 1996-97 was taken note of and deduction to that effect was made. Therefore, the first grievance of the respondent stood addressed. - grievance was that the changes of the parameters introduced in the machinery, would have their own effect upon the production. It is not in dispute that any change in parameters of a re-rolling mill would become relevant or acceptable only on being certified by the Department. Admittedly, no such certification has taken place. Order of Tribunal set aside - order, passed by the Assessing Officer determining the annual capacity of the Mill for the financial year 1997-98 at 3784.48 MTs., shall stand confirmed - Decided in favour of Revenue. Issues:1. Determination of annual capacity of a Hot Re-rolling Steel Mill for the financial year 1998-99.2. Interpretation of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997.3. Consideration of changes in parameters affecting production capacity.4. Application of Rule 5 in the context of determining annual capacity.5. Compliance with certification requirements for changes in machinery parameters.Analysis:1. The case involved a dispute over determining the annual capacity of a Hot Re-rolling Steel Mill for the financial year 1998-99, leading to multiple appeals and orders due to lack of attention and summary judgments.2. The Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 were crucial in this case, with Rule 3 outlining parameters for capacity determination and Rule 5 specifying that if the determined capacity is less than actual production, the latter shall be considered the capacity.3. The respondent raised concerns about incorrect figures and unaccounted factors like scrap and changes in production parameters affecting capacity, leading to appeals and remands by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT).4. The application of Rule 5 was pivotal, as it mandated considering actual production if higher than determined capacity. The judgment highlighted the importance of adhering to this rule, as seen in the decision of the Supreme Court in Commissioner of Central Excise, Chandigarh v. Doaba Steel Rolling Mills.5. The absence of certification for changes in machinery parameters was noted, emphasizing that such alterations must be certified by the Department to be considered in determining production capacity. The judgment overturned the Tribunal's decision and confirmed the Assessing Officer's order on the annual capacity of the Mill for the financial year 1997-98.