2011 (6) TMI 551 - AT - Central Excise

Duty - duty under Section 3A of the Central Excise Act 1944 - annual capacity was determined under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules 1998. The Commissioner while determining the production capacity of the appellant factory took into account not only the number of chambers (which were three in number) but also the cooling zones and arrived at the total number of chambers at 3.239 chambers Held that - to be counted as a chamber the equipment has to be installed in or attached to stenter and further the said equipment should aid in the process of heat setting or drying of the fabrics the cooling zone is neither installed in nor attached to the stenter. Further it is not aiding the process of heat setting or drying of the fabrics but merely cools the fabrics which comes out of the stenter the inclusion of the cooling zone in the number of chambers used for processing is incorrect in law order to the extent of excluding the length of the cooling zone in the computation of chambers appeal is allowed

Summary

Issues: Determination of annual production capacity based on inclusion of cooling zone in the number of chambers used for processing.

In this case, the appellant, a textile fabric processor, appealed against an Order-in-Original passed by the Commissioner of Central Excise, Mumbai IV. The appellant had opted for duty payment under Section 3A of the Central Excise Act, 1944, where the annual capacity was determined under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998. The Commissioner included the cooling zone in the total number of chambers, leading to a higher annual production capacity of Rs. 607.51 lakhs for the year 1999-2000. The appellant argued that the cooling zone was not aiding the heat setting or drying process, as it was meant solely for cooling the fabrics after they came out of the chambers. The Tribunal analyzed the rules and found that for an equipment to be considered a chamber, it must be installed in or attached to the stenter and aid in the heat setting or drying process. Since the cooling zone did not meet these criteria, the Tribunal ruled in favor of the appellant, excluding the cooling zone's length in the computation of chambers. As a result, the appeal was allowed, and the impugned order was modified accordingly.