2015 (10) TMI 1657 - AT - Central Excise

Fabric processor's appeal allowed, order set aside in capacity determination case; legal precedents crucial

The Tribunal set aside the impugned order and allowed the appeal in a case involving a fabric processor challenging the determination of their annual ... Determination of annual capacity of production - Compounded levy scheme - Demand of differential duty - Held that:- Tribunal in the case of Samarth Knitters P. Ltd. - [2013 (12) TMI 812 - CESTAT MUMBAI] has dealt with exactly similar issue - In view of the said decision and also keeping in view the fact that the appellant has represented to the Commissioner after the final order and there has been no response from the Commissioner for the said representation, the impugned order is set aside - Decided in favour of assessee. Issues:1. Determination of production capacity under a compounded levy scheme for fabrics.Analysis:The case involved the appellant, a fabric processor, challenging the determination of their annual production capacity under a compounded levy scheme introduced in 1998. Initially, the Commissioner provisionally fixed the capacity at 17 chambers, which was later increased to 18.30 chambers in a final order dated 14.06.1999, considering the length of gallery and cooling zone. The appellant raised objections through a representation to the Commissioner, but received no response. Subsequently, demand notices for recovery of differential duty were issued, leading to confirmation by the original and first appellate authorities.Upon hearing both sides, the Tribunal referred to a previous case involving a similar issue and cited a decision by the Hon'ble Bombay High Court regarding the relevance of gallery length in fixing stenter capacity. The High Court had ruled that gallery length should not be considered in such determinations. Relying on this precedent and noting the lack of response to the appellant's representation post the final order, the Tribunal set aside the impugned order and allowed the appeal. The decision highlighted the appellant's right to challenge demands based on such grounds even if the initial capacity determination was not contested.In conclusion, the Tribunal's judgment emphasized the importance of considering legal precedents and ensuring due process in administrative decisions related to capacity determinations under levy schemes. The ruling underscored the significance of addressing representations made by parties affected by such determinations and upheld the appellant's right to challenge demands based on valid grounds, ultimately leading to the setting aside of the impugned order and the allowance of the appeal.