JAMMU CASTINGS (P) LTD. Vs. CCE

JUDGEMENT

(1.) M/s. Jammu Casting Pvt. Ltd. have preferred this appeal against Order -in -Original No. 2/CE/CHD -II/2002 dated 26.2.2002 under which Commissioner, Central Excise has redetermined their Annual Production Capacity at 22400 M.T. with effect from 1.10.99 under Section 3A of the Central Excise Act.

(2.) Shri R. Santhanam, learned Advocate, submitted that the Appellants manufacture M.S. ingots; that their annual capacity of production was determined as 9600 M.T. for one furnace of 3 MT with effect from September 1997; that thereafter they installed a new induction furnace of 4 MT and informed the Department, under letter dated 30.6.99, that the new furnace would be a substitute for the earlier furnace; that a show cause notice dated 4.10.2001 was issued them alleging that they did not obtain the written approval of the Commissioner before erecting 4 MT furnace as required under Rule 3 (4) of the Induction Furnace Annual Capacity Determination Rule, 1997; that it was also mentioned in the notice that the Appellants were operating both the furnaces intermittently and were getting their furnaces sealed/unsealed from the Department for which there was no provision in the said Rules, 1997; that the Commissioner under the Order impugned has determined their Annual capacity on the basis of both the furnaces holding that the Annual Capacity of Production has to be determined keeping in view the capacity of furnaces installed in the factory and not on the basis of sealing/de -sealing of the furnaces.

(3.) The learned Advocate, further, submitted that the Appellants have not contravened the provisions of Induction Furnace Annual Capacity Determination Rules, 1997 as no prior permission of the Commissioner was required as no change took place on the existing furnace installed in the factory as they installed a entirely new furnace; that they never proposed to increase the capacity to 7 MTs; that the Annual Capacity Production cannot be determined on the basis of two furnaces as the same were never run simultaneously; that when 3 MT furnace was in operation, 4 MT was closed and vice versa; that in addition they were getting their furnaces sealed/unsealed from the Department which goes to show that both the furnaces did not run simultaneously; that Rule 4 of 1997 Rules clearly provides that "The capacity of production for any part of the year, or for any change in the total furnace capacity, shall be calculated pro rata on basis of the annual capacity production determined"; that accordingly their annual capacity cannot be determined on the basis of two furnaces since they never run simultaneously. He also mentioned that in the case of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 issued under Section 3A of the Central Excise Act itself, there had been no provision for sealing/unsealing of the stenter; that, however, the Board vide letter F.No.341/61/98 T.R.U., dated 10.12.1998 reported in 1999 (105) ELT (T -24) has provided for sealing/unsealing of the stenter; that similarly there cannot be any objection for sealing/unsealing of induction furnace on the ground of 'no provision' in the Rules. The learned Advocate also emphasised that in the case of other units in the same Commissionerate and in other Commissionerate, the Annual Capacity of Production has been determined in such situations only on the basis of one furnace. He referred to the order of the Commissioner, Chandigarh determining the Annual Capacity of M/s. Yamuna Alloys Ltd. on the basis of one furnace only though they had installed two furnaces as Range Superintendent under letter dated 24.11.97, had reported that only one furnace was under production. He also referred to the Order dated 13.11.98 passed by the CCE, Kanpur in the case of M/s. Balbir Steels (P) Ltd. Order dated 27.3.98 in the case of M/s. Sigma Castings (P) Ltd. passed by the CCE, Allahabad and Order dated 21.9.2001 passed by the CCE, Patna in the case of M/s. Patwari Steels P. Ltd. Finally, the learned Advocate mentioned that in the case of break down of one furnace there cannot be any other procedure except the procedure of sealing/unsealing of furnace as abatement of duty cannot be claimed for the closure of one furnace as the Appellate Tribunal has held in the case of Doaba Rolling Mills Pvt. Ltd. v. C.C.E., Meerut, 1999 (102) ELT 768 (T) that for granting abatement, "the requirement is that the factory should not have produced during the continuous period of not less than seven days.. We are unable to accept the contention of the learned Counsel that abatement is to be granted furnace wise."