CEC No.16 of 2004 1 N THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CEC No.16 of 2004 Date of decision:20.5.2008 M/s APS Associates (P) Ltd. ......Petitioner Versus Commissioner of Central Excise Commissionerate-I and another ......Respondents CORAM:- HON'BLE MR.JUSTICE RAJIVE BHALLA HON'BLE MR.JUSTICE RAKESH KUMAR GARG * * * Present: Mr. Jagmohan Bansal, Advocate for the petitioner. Ms. Anjali Kukkar, Advocate for the respondents. * * * Rakesh Kumar Garg, J . 1. The petitioner-Company is engaged in the manufacture and sale of M.S Ingots falling under Central Excise Tariff Heading 7206.90. The duty is chargeable to the petitioner-Company in terms of Section 3A of the Central Excise Act 1944 read with Rules framed therein known as Induction Furnance Annual Capacity Determination Rules, 1997 (hereinafter referred to as the 'Rules') on the basis of annual production capacity of the Induction Furnance Unit. The petitioner filed declaration in respect of the furnance along with a certificate dated 7.9.1997 of the Chartered Engineer claiming therein that the capacity of the furnance cannot exceed 2.6 metric tonnes because they have sanctioned load of 1300 KW electricity only, which was insufficient for utilisation of the full capacity of the furnance as the load required for that purpose was 1600 KW. The Commissioner vide order dated 14.10.1997 determined the annual production capacity of the furnance at 3.2. MT on the basis of the capacity of the induction furnance recorded in the invoice of the supplier of CEC No.16 of 2004 2 the furnance. The said order was challenged by the assessee-petitioner before the Tribunal and the case was sent back to the Commissioner for de novo consideration after affording an opportunity of hearing to the petitioner. After remand the adjudicating authority, i.e., Commissioner vide his order dated 5.12.2000 again determined the total capacity of the furnance installed in the factory of the asseessee at 3.2 MT by applying the formula as provided under Rule 3(3) of the Rules. 2. The assessee filed an appeal before the Tribunal challenging the above said order of adjudication by the Commissioner. However, the said appeal of the petitioner was rejected vide order dated 3.5.2002 of the Tribunal. The petitioner has filed the present reference petition under Section 35(H)(I) of the Central Excise Act, 1944 praying before this Court to direct the Tribunal to send the statement of facts of the case and refer the following question of law which is said to have arisen out of the order of the Tribunal dated 3.5.2002: “Whether the learned Tribunal, respondent No.1 was justified in rejecting the plea of the petitioner that the provisions of Rule 3(2) of Induction Furnance Annual Capacity Determination Rule, 1997, are not attracted in the present case in view of the fact that the capacity of the furnance was reduced to 2.6 MT?” 3. Mr. Jagmohan Bansal, learned counsel for the petitioner has vehemently argued that the respondents have no authority in law to determine the capacity of the furnance at 3.2. MT ignoring the sanctioned power load and the certificate of the Chartered Engineer, since the technical parameters for determining capacity by making proper verification and measurement of the production and capacity thereof with reference to the furnance, cannot be ignored. He has further argued that the CEC No.16 of 2004 3 respondents-authorities ought to have adopted the capacity at 2.6 MT and worked out the duty liability on that basis, as per the formula, which he has failed to do and, hence, the question of law referred to above does arise in the present case. 4. On the other hand, Ms. Anjali Kukkar, learned counsel for the respondents, has supported the orders of the Commissioner and the Tribunal and argued that the annual capacity of the furnance has been determined on the basis of the invoices issued by the supplier of the said furnance. Simply because he is not utilising the said furnance to its full capacity, will not give him any right to get the determination of the annual production capacity on that basis. She has further argued that the question raised by the petitioner is essentially a question of fact and the Tribunal has given a categoric finding regarding the capacity of the furnance and, therefore, the present petition is liable to be dismissed. 5. We have heard learned counsel for the parties and perused the record. 6. Rule 3 of the Induction Furnance Annual Capacity Determination Rules, 1997 lays down the mode and the manner for determining the annual capacity production of the Furnance. Sub-rule 2 of this Rule 3, which has been relied upon by the assessee in the instant case, reads as under:- “If the invoice or documents referred to in sub-rule (1) is not available for any reason with the manufacturer then the Commissioner shall ascertain the capacity of the furnances installed in the induction furnance unit on the basis of the capacity of comparable furnances installed in any other factory in respect of which the manufacturer's invoice or other document indicating the capacity of the furnance is available or, if not so CEC No.16 of 2004 4 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.” 7. In the instant case, admittedly, as per invoice of the supplier who supplied the furnance to the assessee-petitioner, the full capacity of the furnance is 3.2. MT. The only plea taken by the petitioner is that the sanctioned load of the electricity is less than the required one for utilisation of the full capacity of the furnance and. therefore, the capacity of their furnance deserves to be determined at 2.6. MT. However, this plea of the assessee is not maintainable as in terms of the sub-rule 2 of Rule 3 of the Rules, 1977, referred to above, sanctioned load of the petitioner could not be made basis for determining the capacity of his unit. From a bare reading of the aforesaid rule, it is quite clear that the capacity of the furnance is to be determined on the basis of the documents or invoice as referred under sub-rule (1) of Rule 3, and in case the documents as referred to in Rule 3(1) of the Rules are not available, in that eventuality, the authority may ascertain the capacity of the furnance installed in the induction unit on the basis of the capacity of comparable furnances installed in any other factory in respect of which manufacturers' invoice or other document indicating the capacity of the furnance is available or, if not so possible, on the basis of any other material as may be relevant for this purpose. 8. Admittedly, the annual production capacity of the furnance is 3.2 MT as per the invoice of the supplier. In view of this fact alone, the provisions of Rule 3(2) of the Rules of 1997 are not attracted in the present case and as such determining the annual production capacity of the furnance of the assessee on the basis of any other material, i.e., certificate of the Chartered Engineer etc. or on the basis of sanctioned load of CEC No.16 of 2004 5 electricity cannot be made. The ground taken by the petitioner is not tenable, as it is for him to utilise the full capacity of the furnance for the production of their final product. Even otherwise, the question of law sought to be raised by the petitioner is a question of fact and in view of the admission of the assessee, the capacity of the furnance is 3.2 MT as per the invoice of the supplier, Rule 3(2) of the Rules is not attracted in the present case. 9. We find no error in the impugned orders of the Commissioner as well as the Tribunal. No question of law, much less substantial question, arises in the present petition and, thus, the petition being without merit is dismissed. 10. Ordered accordingly. (RAKESH KUMAR GARG) JUDGE May 20, 2008 (RAJIVE BHALLA) ps JUDGE