2006 (4) TMI 432 - AT - Central Excise

Summary

Issues:
1. Inclusion of length of galleries in fixation of Annual Production Capacity.

Analysis:
The issue in the present appeal revolves around the inclusion of the length of galleries in determining the Annual Production Capacity (APC) of the appellants. Initially, a provisional order by the Commissioner fixed the number of chambers at nine, with a duty liability of Rs. 1.5 lakhs per chamber per month. However, upon further inspection, it was discovered that the rail length of the galleries was not considered in the calculation. Subsequently, show cause notices were issued proposing duty recovery for the period in question. The final order by the Commissioner set the chambers at 9.71, which was not challenged by the appellants. The Additional Commissioner, citing a Supreme Court decision, initially dropped the demand based on the exclusion of galleries. However, the Commissioner (Appeals) held that despite the exclusion of galleries, the duty liability should be based on the final APC order, which had attained finality as it was not appealed against.

Moving forward, it was argued that the first show cause notice was issued before the final order was passed, and the appellants were complying with the provisional APC order. The appellants contended that the non-challenge to the final APC order should not hinder them from benefiting from the Supreme Court decision in Sangham Processors. They challenged the second show cause notice effectively by filing a reply, asserting that the Revenue's stance on including galleries was indeed challenged. A recent decision by the Bombay High Court supported the view that the proceedings for short levy were independent and substantive, warranting a separate challenge. Consequently, the matter was remanded to the Tribunal for fresh consideration.

In conclusion, considering the timing of the show cause notices in relation to the final APC order, and in light of the legal precedents and challenges made by the appellants, the impugned order was set aside. The matter was remanded to the original adjudicating authority for a fresh decision, guided by the observations made during the appeal process.