CHOUDHARANA STEEL (P) LTD. Vs. CCE

JUDGEMENT

(1.) The appellants are engaged in the manufacture of M.S. Ingots/billets falling under Chapter Sub -heading 7206.90 of the CET Schedule. In August 1997 he opted for payment of Central Excise duty under the Compounded Levy Scheme under Rule 96ZO (3) of the Central Excise Rules, 1944 read with Section 3A of the Central Excise Act, 1944. On the basis of their declaration dated 11.8.97 and the verification made by Central Excise Officers, the jurisdictional Commissioner determined the Annual Capacity of Production [in short, ACP] of the appellants provisionally under the Induction Furnace Annual Capacity Determination Rules 1997 [in short, ACD Rules]. Accordingly, the ACP was 8956.80 MTs and the monthly duty liability worked out to Rs. 4,66,500. Subsequently, a team of Central Excise Officers and an independent expert visited the appellant's factory on 15.1.98 and remeasured the parameters of the induction furnace and, on that basis, the Commissioner redetermined ACP as 10,360.32 MTs.'The resultant monthly duty liability was Rs. 5,39,600. After these results were communicated to the party by letter dated 21.3.98, the appellants filed a representation with the Commissioner seeking refixation of ACP. On 29.5.98, they submitted a reminder to the Commissioner. The request made in these representations was that the volume of the furnace crucible should be recalculated by - -

(2.) Heard both sides.

(3.) Ld. advocate Shri A.L. Mathur submitted that the Commissioner had determined the ACP of the appellants' induction furnace arbitrarily without duly following the procedure laid down under Rule 3 of the ACD Rules. Under Rule 3 ibid, the Commissioner ought to have, in the first instance, called for authenticated copy of the manufacturer's invoice or other document and determined the ACP on the basis of such document. It was only if such invoice or document was not available that the Commissioner could proceed to determine the ACP on the basis of other relevant materials including any expert opinion. In the instant case, Ld. advocate submitted, the Commissioner straightaway proceeded to determine the ACP under Sub -rule (2) bypassing Sub -rule (1) of Rule 3 ibid, which was not permissible. Counsel pointed out that, even after the appellants produced the manufacturer's invoice and certificate of furnace specifications, the Commissioner did not properly examine the same and he rejected the documentary evidence without valid reasons. Referring to technical aspects, Ld. counsel submitted that, as the furnace crucible had an inner surface tapering downward, its top inner diameter should not have been taken for calculation of its volume. The average of the top and bottom diameters should have been chosen for the purpose. He further submitted that, as the SS turns at the bottom of the crucible had the sole function of cooling the bottom slab of the crucible lining and were in no way related with heating of metal in the crucible, the height of the SS turns should have been excluded from total height of the crucible to get its effective depth. If the above allowances had been given, the correct capacity of the crucible would have worked out to 2.798 MTs instead of 3.235 MTs and, accordingly, the correct ACP would have worked out to 8945 MTs. instead of 10360.32 MTs determined by the Commissioner. Ld. advocate prayed for setting aside the ACP determined by the Commissioner.