JAIRAJ ISPAT LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal arises out of the Order -in -Original No. 3/99, dated 25 -1 -1999 wherein the learned Commissioner has re -determined the annual capacity of production of the appellants' induction furnace under Section 3A of the Central Excise Act, 1944 together with Notification 20/97 -C.E. (N.T.), dated 25 -8 -1997 prescribing Induction Furnace Annual Capacity Determination Rules, 1987 made effective finally from 1 -8 -1997.

(2.) HEARD Shri J. Sankararaman, learned Counsel and Shri K. Vishnu, learned Consultant for the appellants and Shri S. Kannan, learned DR for the Revenue. For brevity the facts relating to this issue and the nature of dispute before us were considered at some length in our Stay Order No. 966/99, dated 18 -6 -1999 1999 (114) E.L.T. 152 (Tribunal) by which waiver of pre -deposit and stay had been granted. The same is extracted below :

(3.) THE learned Counsel further submits that the Revenue has not issued any notice proposing to revise the capacity fixed earlier under Section 3A of the Act either on the ground that the evidence shown in the said invoice was fraudulent or on the ground that the appellants had surreptitiously made changes in the induction furnace without taking prior permission from the department as per Section 3A(4). There is no evidence led by the department to allege either of these. Instead the impugned order merely holds that when on actual verification in two heats actual quantity produced therein it was found that variation is to the extent of 40%, of the additional production than the capacity already determined, then integrity of the invoice considered earlier has been rendered doubtful. Learned Counsel submits that there is vast difference between the position that doubts were harboured and that these doubts are well founded. However, no evidence has been led. He submits that during re -lining the induction furnace with particular lining refractories, actual production gets changed because the quality of the refractory action of these linings get changed due to wear and tear. Therefore, it is possible that the same induction furnace, without any capacity changes made therein, will produce different quantity during different periods of its operation and life cycle. He submits that if this is not so, then there was no need for the scheme for annual capacity determination as deemed production. He further submits that the Chartered Engineer in his report to the Collector, after trial conducted in his presence of two heats, has clearly mentioned therein that there was no change in the setting of the transformers, which goes to show that there was no evidence that any changes were made in the induction furnace with respect to its capacity. Hence he submits that it is also not the department's case that the appellants had surreptitiously made any change in the furnace. He submits that in these circumstances, the law provides that once the Collector has applied his mind, caused basic enquiries on the authenticity of the invoice provided to him and fixed the production capacity as per Section 3A and the rules made in this behalf, there is nothing either in the Section or the rules by which the Collector can revise at his own behest the production so fixed merely on the basis of two trials for ascertaining the actual production into two heats. Unfortunately, this is actually what has been done and therefore, he submits that this action is against the prevailing law in the matter. He prays that the impugned order needs to be set aside.