EMKAY ALLOYS PVT. LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants were engaged in the manufacture of non -alloy steel ingots during the material period. Their Annual Capacity of Production (ACP) was determined by the Commissioner of Central Excise for the period from 1/9/97 at 25,600 MTs under Rule 3(3) of the Induction Furnace Annual Capacity Determination Rules 1997 and they were directed to discharge duty liability accordingly under Rule 96ZO of the Central Excise Rules, 1944 vide Commissioner's Letter No. IV/16/321/97 -CE dated 16.9.97, impugned in the present appeal. The above letter took into account two furnaces and accordingly determined the ACP. The appellants grievance is that their repeated representations [dated 8/8/97, 11/8/97 and 30/8/97] for determination of ACP based on only one furnace as the other furnace was out of operation during the entire period were not heeded by the Commissioner. It is their further grievance that any opportunity of being heard, which ought to have been given under Section 3A(i) of the Central Excise Act, was not given by the Commissioner before determining ACP as above. Thus the challenge in the appeal against the above ACP is mainly on the ground of violation of natural justice. It further appears from the memo of appeal that the admitted liability [duty of Rs. 15,46,666/ -] was discharged by the appellants. Learned Counsel for the appellants has pointed out that, in a subsequent letter dated 16/6/98, learned Commissioner determined the ACP afresh after taking into account only one furnace. The new ACP is 12,800 MTs. We have heard learned SDR also.

(2.) AFTER considering the submissions, we have found substance in the grievances raised by the appellants. Determination of ACP was a quasi -judicial function and the party ought to have been given a reasonable opportunity of being heard by the Commissioner before determining their ACP. The Commissioner's letter communicating the ACP to the party does not indicate that any such opportunity was granted to them. Hence the determination of ACP under challenge is set aside and the Commissioner is directed to determine the ACP of the appellants afresh for the period covered by the aforesaid letter dated 16/9/97 after giving them a reasonable opportunity of being heard. The appeal stands allowed by way of remand.