JUDGMENT
Archana Wadhwa, Member (J)
1. The appellant company is engaged in the manufacture of non-alloy steel bars and rods falling under Chapter 72 of the Central Excise Tariff Act, 1985. The dispute in the present appeal relates to the annual capacity of production fixed by the Commissioner, vide his impugned Order under the provisions of Hot Re-Rolling Steel Mills and Annual Capacity Determination Rules, 1997. The impugned Order has been passed by the Commissioner in de novo proceedings, when the matter was earlier remanded to him by the Tribunal with directions to verify the parameters of the mill with regard to ‘d’ factor.
2. During the de novo adjudication, verification was conducted and it was found that ‘d’ factor has been measured as 160 mm. However, during verification, it was also found that the ‘d’ factor on the left side of the last finishing rolling stand came out to be 169 mm. instead of 160 mm. Accordingly, the Commissioner adopted as average of the two measurements i.e. 160 mm. and 169 mm. and by taking the same to be 164.5 mm., fixed the Annual Capacity of Production.
3. The appellants’ grievance, duly represented by Shri B.N. Chattopadhyay, learned Consultant, is that the ‘d’ factor has been given in the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 as pinion center distance of the pinion stand connecting the last rolling Mill Drive of the finishing mill excluding any pinch roll. In accordance with the said measurement, the ‘d’ factor has been found to be 160 mm. As such, it was not open to the Commissioner to measure the ‘d-1’ on the left side of the last finishing roll stand and adopt the average of the two. There is no such provision under the said Rules and by doing so, the Commissioner has gone beyond the provision of the said Rules.
4. The second issue is that the Verification Report was conducted on 12.10.99 and the re-determination of the Annual Capacity has been made effective from the said date. The appellants’ contention, on the other hand, was that the parameters were changed with effect from 1.6.99 and due intimation to that effect was given to the Revenue. In the earlier Remand Order, the Tribunal had directed the Commissioner to refix the annual capacity from the date of actual change in the parameters carried out by the appellants. However, the Commissioner in his impugned Order has further refixed the annual capacity from the date of verification and not from the actual date of change in the parameters.
5. We have also heard Shri A.K. Mondal, learned SDR for the Revenue.
6. As regards the ‘d’ factor, we find that the Commissioner has not disputed the fact that during the course of verification, the pinion center distance of the finishing roll stand was found to be as 160 mm. As per the provisions of Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997, the ‘d’ factor is to be taken as pinion center distance of pinion stand connecting the last rolling Mill Drive of the finishing mill excluding any pinch roll. As per the said formula, the ‘d’ factor has been found to be 160 mm. by the visiting officers. As rightly contended by the learned Consultant, once the ‘d’ factor has been correctly found, it was not open to the visiting officers to find out the ‘d-1’ factor. There is no term–‘d-1’–in the said Rules and the adoption of the average of the ‘d’ factor and the ‘d-1’ factor was not justified. Accordingly, we are of the view that the Annual Capacity has to be determined by taking the ‘d’ as 160 mm. and not as 164.5 mm.
7. As regards the date of refixation of the Annual Capacity, the appellants requested the Commissioner for his permission to reduce the pinion center distance from 196 mm. to 155 mm. and such permission was granted by the Commissioner, vide his letter dated 6.5.99. Thereafter, the appellants under their letter dated 27.5.99 intimated that the changed ‘d’ factor would commence from 1.6.99 and again vide their letter dated 2.6.99, they communicated that they have commenced their production with changed ‘d’ factor with effect from 1.6.99. The Tribunal in the earlier Order had observed that the date of effectiveness of the refixed Annual Capacity of Production would relate back when the necessary changes in the value of the parameters were undertaken by the appellants, irrespective of the fact as to when the actual verification was conducted by the Central Excise Department. The Commissioner vide his impugned Order has made the re-fixation effective from 12.10.99 when the joint verification was conducted on the ground that the appellants have not followed the conditions as contained in the Revenue’s letter dated 6.5.99, when the permission was granted to them to effect reduction in pinion center distance–‘d’. However, we find that the appellants have intimated the Revenue about the date of such reduction as also about the production having commenced with the changed parameters. As such, the Commissioner was not justified to make the refixation effective from the date of visit of the officers and not from the date of actual change in the parameters.
8. In view of the foregoing, the Annual Production Capacity is required to be fixed by taking the ‘d’ factor as 160 mm. and the same is required to be made effective from 1.6.99 i.e. the date of actual change in the parameters. Accordingly, we set aside the impugned Order and allow the appeal in above terms.