COMMR OF C EX, CHANDIGARH Vs. GOPAL MILLS

JUDGEMENT

(1.) The revenue has approached this Court by seeking a reference under Section 35H(1) of the Central Excise Act, 1944 (for brevity the Act') for directing the Excise and Gold (Control) Appellate Tribunal (for brevity CEGAT') to state the facts of the case and refer the following question of law that would arise for adjudication of this Court from its final order dated 5-2-2002:

(2.) The assessee had two Rolling Mills A' and B' run by a single electric motor and single fly wheel with following d', n' and I' parameters :

(3.) The aforesaid declaration was made on 26-9-1997 by the petitioner firm as per the requirement of Rule 3(1) of the Hot Rolling Steel Mills Annual Capacity Determination Rules, 1997 (for brevity the Determination Rules, 1997'). On 24-1-1998 the preventive staff of the Central Excise Division, Patiala paid a surprise visit to the factory premises of the assessee in pursuance of a complaint in which allegation was made for mis-declaration of factor d' in respect of rolling mill B'. One Shri Sushil Mittal, who was present at the time of visiting officer produced their central excise register. After perusal of the declaration made on 26-9-1997 the officers found that rolling mill B' was found working while rolling mill A' was found closed and idle. The factor d' of both the rolling mills were verified in the presence of Shri Sushil Mittal which was measured by Sh. Gurdeep Singh, Foreman of the assessee. The factor d' of pinion stand of rolling mill B' which was found working was of 405 mm as against 350 mm declared by the assessee in their declaration dated 26-9-1997. The verification report was submitted which was duly signed by Shri Mittal, their Foreman and the visiting Central Excise Officer as a token of correctness of the measurement and verification of d' factors of two pinion stands of the rolling mills was taken. The Revenue has claimed that partner of the assessee admitted the facts and further stated that the assessee had changed factor d' of their rolling mill B' from 350 mm to 450 mm in the first week of November, 1997 and did not give any intimation to the revenue about this change because they were not aware of any such requirement. On 11-3-1998 the partner had further stated that the assessee did not have purchase bill regarding the purchase of pinion stand of 405 mm d' parameter. He also stated that pinions of the stand were manufactured by their employees in their factory itself from their old rough rolls and no separate expenditure was incurred by them. He produced copies of their RT12 returns for the year 1996-97 and 1997-98, declaration dated 26-9-1997 filed under Rule 96ZP(3) of the 1944 Rules. The total quantum of rolled steel products manufactured by them during the period April, 1996 to February, 1997 and corresponding period of the year 1997-98 were noticed and the assessing authority proceeded to infer the increase on that basis and re-determined the same. Accordingly a show cause notice was issued to the assessee on 1-5- 1998 where the assessee was called upon to show cause as to why the following actions be not taken :