TMI Blog1996 (2) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... o the appellants asking them to show cause to explain as to why the differential duty of Rs. 13,21,559.30 should not be demanded from them, on the goods cleared during the period 1-1-1978 to 30-10-1979. The Assistant Collector adjudicated the case and held that annual installed capacity for the mill exceeds 5,000 MT but does not exceed 10,000 MT. The Collector (Appeals) upheld the order of the Assistant Collector and also held that longer period of five years would be attracted in the case. On appeal to the Tribunal, the Tribunal remanded the case back to the Assistant Collector for readjudication. The Assistant Collector again adjudicated the case on 23-7-1986 and concluded that the annual installed capacity of the mill was more than 10,000 MT and confirmed the demand. On appeal to Collector (Appeals), the case was sent for decision to Collector, Central Excise. The Collector, Central Excise confirmed the demand. 3. Shri M.L. Lahoty, the learned Advocate appeared for the appellants and Shri J.M. Sharma, the learned JDR for the respondent. 4. The appellants argued before us that a show cause notice was issued under Rule 10 which is no more valid and Section 11A requires only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed as such for all purposes. Therefore, rules made under a statute must be treated as if they were in the Act itself both for the purpose of construction and also for the purpose of obligation." We find that no doubt, Rule 10 was omitted with effect from 17-10-1980. We observe that Section 11A having similar wordings came into force simultaneously thus, maintaining its continuity. It is well settled principle of law that Rule framed under the Act is a part of the Act and has to be construed as such for all purposes. Having regard to this fact, we hold that the show cause notice was legal and proceedings under the show cause notice could be continued after 17-11-1980. On the question of annual installed capacity of the paper mill, the appellants argued that the paper mill was set up in the backward region of Marathwada and the production was commissioned in January, 1979. That they imported second hand machinery and the production during the first six months was only 1113 tonnes, a proposal was made to the financial institution in July, 1979 for installation of Bleach Plant to increase the capacity from 3750 tonnes to 4750 tonnes during the period of six months; that renov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineer as also from Saharanpur Institute of Paper Technology. The DGTD is a highly responsible body of Government in whom Govt. reposes the greatest trust. A certificate issued by DGTD should not be thrown out on certain hypothetical arguments. In their correspondence with DGTD the respondents had disclosed the production figures for 10 years, out of which in five years, it did not exceed 2000 MT. After having considered all the salient facts and data, the Ministry of Industry had issued a certificate of registration for 2000 MT annual capacity. It may also be pointed out the prescribed form of application has no column like the installed capacity which may have relevance with reference to Notification 128/77. This apart it appears that the annual production may not correspond with installed capacity. From Shri Iyengar s letter it appears that ordinarily the licensed capacity should be treated as installed capacity and accordingly to the endorsement on the respondent s licence the capacity is about 2000 metric tonnes. The certificate issued by DGTD should not be discarded on the ground that it was issued for the quantity requested by the respondent. If Revenue has any reservation ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and machinery; that the words ₹ 6000 MT was substituted by 9000 MT under letter dated 24-12-1975. The Department also contested that the Ministry of Industry in their letter No. V(132) 74 - Paper, dated 12-1-1978 had informed the assessee that the Government of India had allowed some more time for taking effective step upto 31-8-1978. When the assessee was asked to obtain the certificate from DGTD about their installed capacity of the paper mill, they could not produce such certificate. However, the DGTD in their letter No . DPP-40(788)/74, dated 13-5-1980 communicated that the assessees had been permitted to import second hand plant with a capacity from 25 to 30 tonnes per day depending upon the substance range of the paper to be manufactured. The learned DR submitted that for arriving at the installed capacity, the following factors are considered : (i) The length of the machine (ii) The speed of the machine. (iii) The basic weight of the paper to be produced. The speed of the machine was indicated by the DGTD as 500 ft. per minute; that the working hours for a day is taken as 22 hours. The total working days in a year is taken as 330 days as adopted by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds manufactured is the same. Of course, the installed capacity and production for a year are not same, they are entirely different terms. The installed capacity is normally accepted on the basis of the industrial licence and the permission accorded for import of the goods. These two communications clearly establish that the installed capacity of the plant exceeded 5000 MT may be the actual production, never went upto 6000 MT. Having regard to the fact that the installed capacity was indicated as 6000 MT in the letter dated 20-9-1975 issued by the Ministry of Industry which was subsequently enhanced to 9000 MT in the letter dated 24-12-1975, we hold that for the material period, the installed capacity of the paper mill in the instant case shall be taken as 9000 MT per year. We would also like to say that the calculation of the Department was that the installed capacity based on optimum production was 14,113 MT per year which is based on a number of assumptions and presumptions. The installed capacity cannot be determined on the basis of assumption and presumption, therefore, we are not prepared to accept the figure arrived at by the Department. In view of the above findings, we dire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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