OM METALS AND MINERALS Vs. CCE-I

JUDGEMENT

(1.) In this Appeal, filed by M/s. Om Metals and Minerals Ltd., the issue involved is whether their capacity of production is to be redetermined under the provisions of Section 3 A of the Central Excise Act.

(2.) Ms. Reena Khair, learned Advocate, submitted that the Appellants manufacture iron and steel ingots which were liable to Central Excise duty @ Rs. 750 Per MT calculated on the annual capacity of production determined under the Induction Finance Annual Capacity Determination Rules, 1997; that the Commissioner, Central Excise, determined their annual capacity at 9600 MT per annum against which their Appeal was allowed by the Tribunal vide Final Order No. A/844/99 NB dated 9.9.99 directing the Commissioner to redetermine the annual production capacity afresh after granting a reasonable opportunity of hearing; that the Commissioner redetermined the annual capacity of production as 9600 MT which was again remanded by the Appellate Tribunal vide Final Order Nos. A/787 -88/2000 NB dated 5.9.2000 for redetermination of the annual capacity of production and the abatement claimed; that the Commissioner, under the impugned Order, has again determined the capacity at 9600 MT, rejecting their request for redetermination of annual capacity of production in terms of Sub -section (4) of Section 3 A of the Central Excise Act relying upon the judgments in the case of CCE v. Venus Casting (P) Ltd. and UOI v. Supreme Steel and General Mills and holding that the Appellants had not disputed the total capacity of the furnace which is 3 MT as per their declaration and the invoice submitted by them and that they were simply asking determination of the capacity on the basis of average production of last years and abatement to the extent of production of castings which was not expressly permissible under the law.

(3.) The learned Advocate, further, submitted that the Appellants, apart from manufacturing steel ingots, also manufacture castings; that since they are having a common power connection, induction furnace and CR Mill cannot run at one time and are used alternatively; that further induction furnace was not operated at full capacity for all three shifts; that by a subsequent letter dated 2.9.1997, they informed the Assistant Commissioner about the common connection and not using full capacity of the induction furnace; that in their letter dated 4.10.97 addressed to the Commissioner, they indicated the figures of manufacture of casting during the preceding four financial years and mentioned that their overage annual production of steel was under 2600 MT and requested the Commissioner to re -determine their annual production; that they had also given the details of the production during the relevant period i.e. from September 1997 to March 1998 in their letter after the Tribunal had remanded the matter for fresh adjudication vide Order dated 5.9.2000 and had requested for determination of production in terms of Sub -section (4) of Section 3A of the Act. She also contended that Sub -section (4) provides that where an assessee claims that the actual production is lower than the production determined under the Rules, the Commissioner will determine the actual production and re -determine the amount of duty payable; that they satisfy all the requirements of Sub -section (4) of Section 3A and accordingly Commissioner was required under the law to determine the actual production and the duty with reference to such production. The learned Advocate finally submitted that the decisions in Venus Castings and Supreme Steel are not applicable as the issue considered therein was whether a manufacturer who has exercised his option to make payment based on capacity under Sub -rule (3) of Rule 96ZO of the Central Excise Rules, 1944 may make an application for determining the actual production under Section 3A(4) of the Act; that the Supreme Court has held in Venus Casting case that manufacturers who have not opted for Rule 96ZO(3) would be covered by Section 3A(4); that as the Appellants have not opted for the special procedure in Rule 96ZO(3) and have always been operating under Sub -rules (1) and (2) of Rule 96ZO, they remain eligible for Sub -section (4) of Section 3A.