TMI Blog2013 (7) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Shri J.S . Rao , DGM of manufacturer, Shri Tushar Mewar , Senior Marketing Manager of the manufacturer, statement of Shri Sunil Bansal , Director of the assessee - Second proviso to Section 3A (2) of the Act of 1944 provides that in a case where the factor relevant to the production is altered or modified at any time during the year, the annual production shall be redetermined on a proportionate basis having regard to such alteration or modification. If there is an altertion or modification in any factor relevant to production specificed , such production shall have to be redetermined as held by the Supreme Court in Para 22 of CCE v. Doaba Steel Rolling Mills [2011 (7) TMI 10 - SUPREME COURT OF INDIA] – Matter remanded to Tribunal. - D.B . Civil Excise Reference No.12 /2002 - - - Dated:- 17-1-2013 - Mohammad Rafiq And Mrs Meena V Gomber , JJ. For the Appellant : Shri Sarvesh Jain, Counsel For the Respondent : Shri N K Goyal , Counsel JUDGEMENT:- This reference is made by the Commissioner of Central Excise, Jaipur-I, seeking a direction from this Court to the Customs, Excise and Gold (Control) Appellate Tribunal to state and refer following question to this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the actual production capacity of their medium frequency induction melting furnace type ITM -4/1500, which was installed in their factory and therefore the officers of the revenue conducted inquiries. Shri Sunil Bansal , the Director of the assessee unit, in his statement dated 24.03.2000 and 29.03.2000, stated that they were unable to produce the copy of contract with the manufacturer of furnace, and admitted that the type of furnace installed in their factory, which was supplied by M/s ABB Limited, was ITM4 /1500 KW. He also produced a certificate dated 12.08.1998 issued by the manufacturer, whereby the crucible capacity of the furnace was declared to be 2.50 MT to 3.00 MT for melting sponge iron as a component of charge material along-with scrap. He also produced a report of National Institute of Secondary Steel Technology, Mandi Govindgarh , certifying capacity of their furnace as 3.00 MT. In support, he further submitted verification done by Anti-Evasion, Central Excise Commissionerate , Jaipur-I, showing weighment of one heat as 2.965 MT. Shri J.S . Rao , DGM of the manufacturer M/s ABB Limited, in his statement dated 25.10.1999 recorded before the Superintendent (Prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3390 KW was corroborated from the facts contained in the statements of Shri J.S . Rao , DGM of manufacturer, Shri Tushar Mewar , Senior Marketing Manager of the manufacturer, statement of Shri Sunil Bansal , Director of the assesse . On the basis of aforesaid, the revenue held it to be a case of tax evasion in respect of the central excise duty payable for the year 1997-98, 1998-99 and 1999-2000 and accordingly a show cause notice was issued to the assessee on 27.02.2001. The case was adjudicated by the Commissioner of the Central Excise, Jaipur-I, who, vide order dated 05.11.2001, redetermined the annual capacity of induction furnace/crucible installed in factory premises of the assessee as 10848 MT per annum in terms of sub-rule (1) of Rule 3 of the Rules of 1997; ordered for recovery of central excise duty amounting to Rs.20,15,000 /- short paid by the assessee under Section 11A of the Act of 1944 read with Rule 96ZO of the Rules of 1944; imposed a penalty of Rs.20,15,000 /- under Section 11AC of the Act of 1944 read with Rule 96ZO of the Rules of 1944 and further penalty of Rs.2,00,000 /- under Rule 173Q of the Rules of 1944 and also ordered to recover the interest on the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division Bench judgment of the Jharkhand High court in Union Enterprises Vs. Union of India ( UOI ) and Others 2008 (1) CR 493 ( Jhr ) , wherein it was held that the Commissioner has power to redetermine production capacity of furnace. Learned counsel also relied on judgments of the Customs, Excise and Services Tax Appellate Tribunal (for short, 'the CESAT ') in Union Enterprises Vs. CCE 2004 (112) ECR 356 (Kolkata) and argued that the Commissioner was well within his right in redetermining the annual production capacity. Per contra, Shri N.K . Goyal , learned counsel for the respondent- assessee , opposed the reference and argued that once the annual capacity of production has been determined by the Commissioner, he is divested of his powers to redetermine the same because in law no power of review has been conferred upon him. Shri N.K . Goyal , learned counsel for assessee has further argued that the power of review has to be conferred by the statute expressly. Such powers cannot be assumed to be exercised. Total capacity was determined as 3.0 MT provisionally on 29.09.1997 and thereafter physical verification was made by antievasion on 01.01.1998, which found the capacity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be 3390 Kgs . As such I am left with no option but to re-determine the capacity of the said furnace and by doing so I am not violating the provisions of law, as section 11A , Section 3A and Rule 3 of Induction Furnace Annual Capacity Determination Rules, 1997 are independent from those of section 35E ibid. and review procedure is not only the course for reopening the assessment. My above findings are in conformity with Hon'ble Tribunal's decision in the case of M/s Perfect Engineering Works Vs. CCE , Baroda 1996 (81) ELT 182 (Tribunal) where it was held that assessment can be reopened in similar circumstances. Further I find that section 3A of Central Excise Act, 1944 and Rule 4 of Induction Furnace Annual Capacity Determination Rules do not place any ban for re-determination of the annual capacity. The assessee's contention, that capacity has been finally determined after due verification and all the facts were in the knowledge of the department, is unfounded and incorrect. As the verifications if any conducted by the department are of no relevance to this case as the departmental officers were neither technically expert nor the same was a legal requirement as per R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er's invoice, who have supplied or installed the furnace or crucible to the induction furnace unit, and ascertain the total capacity of the furnaces installed in the factory on the basis of such invoice or document; (2) if the invoice or document referred to in sub-rule (1) is not available for any reason with the manufacturer then the Commissioner shall ascertain the capacity of the furnaces installed in the induction furnace unit on the basis of the capacity of comparable furnaces installed in any other factory in respect of which the manufacturer's invoice or other document indicating the capacity of the furnace is available or, if not so possible, on the basis of any other material as may be relevant for this purpose. The Commissioner may, if he so desires, consult any technical authority for this purpose; (3) the annual capacity of production of ingots and billets of non-alloy steel in respect of such factory shall be deemed to be as determined by applying the following formula :- ACP = TCF X 3200, where - ACP = Annual Capacity of Production of the factory producing ingots and billets of non-alloy steel in metric tonnes ; and TCP = Total capacity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cification earlier provided was not found to be correct. Redetermination on the basis of fresh evidence was the only course open to the Commissioner. Second proviso to Section 3A (2) of the Act of 1944 provides that in a case where the factor relevant to the production is altered or modified at any time during the year, the annual production shall be redetermined on a proportionate basis having regard to such alteration or modification. If there is an altertion or modification in any factor relevant to production specificed , such production shall have to be redetermined as held by the Supreme Court in Para 22 of CCE v. Doaba Steel Rolling Mills, (2010) 14 SCC 751 , which reads as under:- 22. Rule 3 of 1997 Rules framed in terms of Section 3A (2) of the Act lays down the procedure for determining the annual capacity of production of the factory. Sub-rule (3) of that Rule contains a specific formula for determination of annual capacity of production of hot rolled products. This is the only formula whereunder the annual capacity of production of the factory, for the purpose of charging duty in terms of Section 3A of the Act, is to be determined. Second proviso to subsection ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
