BHUWALKA STEEL INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner a steel industry is seeking a writ from this Court to strike down Rule 3 of the Induction Furnace Annual Capacity Determination Rules (for short the Rules) in terms of a notification dated 25. 7. 1997 and is also seeking a writ of certiorari to quash an order dated 30. 9. 1997, Annexure H and a letter dated 11. 3. 1998. The petitioner is also seeking a direction for re-determination of the annual capacity of production by taking into consideration the power factor on the facts of this case.

(2.) THE petitioner a Public Limited Company is having a Unit at Kolar and is engaged in the manufacturing of M. S. Ingots of both non-alloy and alloy steel. The petitioner was assessed to Central Excise duty under Chapter 72 of the Act. Duty was paid in terms of the said Tariff Act r/w. Sec. 3 of the Central Excise Act. A new Sec. 3a empowers the Central Government to charge excise duty on the basis of the capacity of production in respect of goods that the Central Government may specify by a notification in the Official Gazette. Annexure A is the notification. In exercise of the powers conferred by Sub-Section (1) of Section 3a of the Central Excise Act, the Central Government specified by a notification dated 1. 8. 1997, the ingots and billets of non-alloy steel falling under sub-heading Nos. 7206. 90 and 7207. 90 and manufactured or produced as notified goods on which the duty is levied and collected in accordance with the provisions of the Act. Annexure B is another Notification. The Government also issued a subsequent notification dated 25. 7. 1997 in terms of Annexure C. Annexure D is a notification dated 1. 8. 1997 bringing into force the Central Excise (seventh amendment) Rules of 1997. The Central Government also issued Rules known as Central Excise Rules 1997 in terms of a notification dated 30. 8. 1997.

(3.) THE petitioner opted for discharge of duty liable every month on a lumpsum basis at Rs. 6 lakhs per month in terms of the Rules. According to the petitioner, the furnace capacity was 3. 6 MTs and on a pro rata basis, the duty liability worked out in the case on hand. The same was intimated to the respondent. The second respondent passed an order determining the annual capacity of production of industrial furnace installed in the petitioners factory at 16,000 MTs in terms of Sub-Sec. 2 of Sec. 3a of the Central Excise Act. He fixed the production capacity for the period from 1. 9. 1997 to 31. 3. 1998 as 9,333. 333 MTs. According to the respondent, the petitioner did not provide the authenticated copy of invoices in respect of the installed furnace or crucibles. The petitioner by a letter dated 15. 10. 1997 stated that the annual capacity at 16,000 MTs is factually correct and it should have been 11, 520 MTs. Petitioner was asked to provide the copies of the invoices. The petitioner has provided those copies in terms of Annexure K, L, M and N. The respondent thereafter by a letter dated 11. 3. 1998 stated that the claim of the petitioner with respect to the annual capacity of production based on the power back cannot be acceded for want of power in this regard. The petitioner produced certain Certificates in support of his case. According to the petitioner, the fixation of annual capacity at 16,000 MT is without any basis and contrary to the acceptable reasons. The petitioner in this case is challenging the Rule as being unreasonable and arbitrary in addition to other prayers as referred to in the prayer column of the petition.