Capacity-based excise on stenters: galleries without qualifying equipment are not counted as chambers under the amended rules.

Section 3A capacity-based excise assessment under the hot air stenter rules turned on whether galleries could be counted as chambers. The 1998 Rules deemed a float drying machine or similar equipment installed in or attached to a stenter for heat setting or drying to be one chamber, while the 2000 Rules expressly excluded galleries from that fiction. Read together with the trade notice and the close timing of the amendments, the later wording was treated as a clarification of the existing scheme rather than a new burden. On that basis, galleries without the specified equipment were not to be counted as chambers, and the Tribunal's reliance on contemporanea expositio was upheld.

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Issues: Whether galleries attached to a hot air stenter are to be treated as one chamber for the purpose of determining annual production capacity under the capacity-based excise scheme.

Analysis: Section 3A of the Central Excise Act, 1944 empowered levy of excise duty on the basis of annual capacity of production, and the 1998 Rules framed thereunder required determination of the number of chambers in a hot air stenter. Explanation I to Rule 5 of the 1998 Rules treated a float drying machine or any other equipment installed in or attached to a stenter for aiding heat setting or drying as one chamber. The later 2000 Rules clarified the position by expressly excluding galleries from that deeming fiction. The amended rule, the contemporaneous trade notice, and the short interval between the two sets of rules showed that the later wording removed the ambiguity rather than introducing a new substantive burden. On that basis, galleries without the kind of equipment contemplated by the rule could not be counted as chambers, and the Tribunal's reliance on contemporanea expositio to resolve the ambiguity was upheld.

Conclusion: Galleries attached to the stenter were not to be treated as one chamber, and the challenge to the Tribunal's view failed.

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