1. The above 3 appeals filed by the same assessee viz. M/s. Godhra Re-Rolling Mills involve a common issue and are hence heard together and disposed of by this common order, after waiving requirement of pre-deposit since the issue in dispute stands settled by the decision of the Larger Bench of the Tribunal in the case of Sawan Mal Shibumal Steel Rolling Mills v. CCE, Chandigarh. I [2001(42) RLT 75 (CEGAT-L.B)].
2. The appellants are manufacturers of hot re-rolled products of non alloy steel by operating a hot steel re-rolling mill. They are liable to pay duty at compounded rates in terms of Section 3A of the Central Excise Act, 1944, and the duty is determined depending on the Annual Capacity of Production, or such factors relevant to the annual capacity of production of the factory in terms of Sub-section (2) of Section 3A of the Central Excise Act. The Hot Rolling Steel Mills Annual Capacity Determination Rules 1997 issued under Sub-section (2) of Section 3A of the Central Excise Act lay down, how the annual capacity of hot re-rolling mills is to be determined. The appellants opted for payment of duty on compounded basis. Since their annual capacity determined was less than the actual production of the mill during the financial year 1996-97, the Commissioner ordered that annual capacity shall be deemed to be equal to the production of the mill during the financial year 1996-97, in terms of Rule 5 of the Re-Rolling Steel Mill Annual Capacity Determination Rules 1997. Subsequently, the appellants applied for change in parameters for calculation of the annual capacity, and recalculated capacity was less than the annual capacity earlier determined. However, since Rule 5 provided that in case the annual capacity determined by the formula in Sub-rule (3) of Rule 3 in respect of a mill is less than the actual production of the mill during the financial year, then the annual capacity so determined shall be deemed to be equal to the production during 1996-97, the commissioner in these cases applied the annual capacity of 1996-97, even after change in parameters and even after reduction in annual capacity. It is the contention of the appellants based upon the Larger Bench decision cited supra that Rule 5 which permits adoption of actual production of 1996-97 does not apply in all cases of change in annual capacity on account of change in machinery, and it is their contention that it is Rule 4(2) of the Rules that will be applicable in a case of change in annual capacity.
3. Ld. D.R. reiterated the findings of the adjudicating authority that Rule 5 will continue to govern situations where there is a change in a capacity due to parameters and is not confined to only cases where there is no change.
4. We h ave carefully considered the rival submissions. We find that in the decision of the Larger Bench relied upon by the ld.Counsel, the Tribunal has held that Rule 5 will have no application when change in machinery leads to reduction in the annual capacity of production, when the same is computed according to the parameters mentioned in Rule 3 of the Hot Rolling Steel Mills Annual Capacity Determination Rules, 1997, and that Rule 5 will apply only in cases where there is no change in the annual capacity production, or the annual capacity of production is increased due to change in machinery of production. As set out earlier, the change in parameters has resulted in reduction of annual capacity of production that is from 1685.46 M.Tons for the year 1996-97 to 1019.36 M.Tons. Therefore, following the ratio of the Larger Bench decision, we hold that Rule 5 is not relevant in the present situation and that actual production of 1996-97 cannot be adopted for such circumstances. In the result we set aside the impugned order and allow the appeals by remand to the jurisdictional Asstt.Commissioner for working out duty liability in the light of the above guidelines.