Full Judgment
2. This case relates to determination of annual capacity of production of the appellant in terms of Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997. The applicant has filed a declaration under Rule 96ZQ and on 27/10/1997 their annual capacity was fixed at 5482 MT.On 09/01/1998 the applicant applied for reduction of the value of 'd' from 182 mm to 158 mm and carried out this change and on 19/01/1998 filed a fresh declaration declaring value of parameter 'd' as 158 mm.
They cleared the goods from February, 1998 as per changed parameters.
The show cause notice issued to them in August, 1998 avers that they are liable to pay duty according to the capacity determined in the order communicated on 27/10/1997, that is, 5482 MT for the months of February and March, 1998.
3. Learned Counsel drawn out attention to the fact that the department has accepted that the applicant carried out the change and thus resulted in reduction of capacity as seen from the Commissioner's order titled "re-fixation of annual capacity of production" dated 28/02/2000.
In this case the communication of Commissioner accepts that the revised annual capacity works out to 1330.593 MT which is less than the actual capacity of production of 5482 MT. In spite of this the Commissioner has held the mandate contained in Rule 5 of the Hot Re-Rolling Steel Mills Annual Capacity Rules, 1997 which provides that in case the annual capacity determined by the formula under Rule 3 in respect of a mill is less than the actual production of the mill during the financial year 1996-97 then the annual capacity so determined shall be deemed to be equal to the actual production of the mill during the financial year 1996-97 will apply. He draws our attention to the decision of the Tribunal in Avadh Alloys Pvt. Ltd. Vs. CCE 1999 (112) ELT 719 which has held that in the event of reduction in Annual Capacity it is Rule 4 which is applicable and not Rule 5. He also cites the decision of the larger bench of the Tribunal in the case of Sawanmal Shibumal Steel Rolling Mills Vs. CCE Chandigarh 2001 (127) ELT 46 in respect of his contention that it is Rule 4 that will be applicable in the present case and therefore prays for waiver of pre-deposit of the duty and stay of recovery pending the appeal.
4. The prayer is opposed by Shri Shaikh, the learned DR who reiterates the finding of the adjudicating authority and who also submits that in the event actual production is higher than the determined capacity the applicant is required to pay duty in terms of the actual production.
5. On a careful consideration of the submissions of the both sides and the various case laws we are of the view that strong, prima facie, case for waiver of pre-deposit has been made out and accordingly we dispense with the pre-deposit of the duty and stay recovery thereof pending the appeal.