2023 (10) TMI 52 - AT - Central Excise

Tribunal grants appeal against production capacity change without notice, quashes additional duty demand.

The Tribunal allowed the appellant to challenge the re-determination of annual production capacity without a show cause notice. The High Court held that ... Determination of annual capacity of production without issuance of the show cause notice - principles of natural justice - HELD THAT:- Although the appellant has not challenged the order of re-determination of annual capacity of production determined by the Joint Commissioner on subsequent dates, but while demanding duty from the appellants, the appellants are having right to challenge the re-determination of annual capacity of production as held by the Hon’ble High Court in the case of M/S. BENGAL HAMMER INDUSTRIES (P) LTD. VERSUS UNION OF INDIA & ORS. [2023 (5) TMI 437 - CALCUTTA HIGH COURT]. The order of re-determination of annual capacity without issuance of show cause notice is not sustainable. Accordingly, the impugned orders have no merits, therefore, the same are set aside. Appeal allowed. Issues involved: Determination of annual capacity of production without issuance of show cause notice.Summary:The appellants filed appeals against impugned orders where annual production capacity was determined without show cause notice. The appellant, engaged in manufacturing Non-Alloy Hot Re-rolled Iron & Steel products, had their monthly duty liability determined under section 3A. The Joint Commissioner ordered a change in the apportionment of Non-alloy and Alloy Steel production, leading to a demand for additional duty. The appellant challenged this without the issuance of a show cause notice, citing the decision of the Hon'ble High Court in a similar case. The High Court observed that the department cannot unilaterally re-fix annual production capacity without due process. The Tribunal found grounds to interfere with the previous order, allowing the appeal and quashing the demand.The appellant was allowed to challenge the re-determination of annual capacity of production, even if they did not challenge the original order. The Tribunal held that re-determination without a show cause notice is not sustainable, setting aside the impugned orders. The appeals were allowed with consequential relief, if any.