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Ambica Industries v. Commissioner Of Central Excise, Lucknow
Factual and Procedural Background
M/s. Ambica Industries challenged the determination of the annual production capacity of their unit manufacturing high re-rolled products under Section 3A of the Central Excise Act and the High Re-rolling Steel Mills Annual Capacity Determination Rules, 1997. The appellants had filed a declaration on 1-9-1997 with parameters of their mill and submitted a certificate dated 4-9-1997 by an expert technical authority, M/s. Rakesh Agarwal and Associates. The Commissioner initially determined their annual capacity at 6590.638 MT by Order No. 94/97 dated 29-9-1997. On appeal, the Appellate Tribunal remanded the matter for redetermination of capacity after granting a personal hearing and supplying the verification report to the appellants. The Department furnished a verification report dated 29-11-1997 and later a chart dated 7-5-2002 with mill parameters, which the appellants contended was not a proper verification report. The appellants also argued that the Department disregarded the expert certificate submitted by them.
Legal Issues Presented
- Whether the annual production capacity of the appellant’s unit was correctly determined by the Commissioner under Section 3A of the Central Excise Act and related rules.
- Whether the principles of natural justice were complied with by furnishing the verification report to the appellants before redetermining the capacity.
- Whether the expert certificate submitted by the appellants could be disregarded in favor of the Department’s verification report.
- Whether the presence of the appellants’ partner at the time of verification affects the validity of the verification report.
Arguments of the Parties
Appellant's Arguments
- Hot re-rolled products were declared notified goods under Section 3A with effect from 1-9-1997, and the appellants filed a declaration with mill parameters accordingly.
- The appellants submitted a technical certificate dated 4-9-1997 certifying their mill parameters.
- The Commissioner’s initial determination of capacity was based on a verification report not supplied to them.
- The Department later furnished a chart dated 7-5-2002 which was unsigned by anyone at their factory and thus not a proper verification report.
- The Department disregarded the technical expert certificate submitted by the appellants.
- On these bases, the appellants contended the annual production capacity determination was flawed.
Respondent's Arguments
- The Department furnished the verification report under letter dated 7-5-2002 which clearly records the presence of Shri Yash Pal Arora, partner of the appellants, at the time of verification.
- The report was signed by Shri Rakesh Agarwal, a Chartered Engineer, confirming expert involvement.
- The appellants cannot claim the verification was not conducted properly given the expert’s involvement and the partner’s presence.
- The Appellate Tribunal’s remand was to ensure the verification report was furnished and natural justice principles complied with, which was done.
- The impugned order determining capacity on the basis of the verification report is justified and should be upheld.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Tribunal considered the appellants’ contention that the Commissioner determined capacity based on a verification report not supplied to them, which justified the remand for redetermination with the report furnished and a personal hearing granted. The Department complied by furnishing a verification report signed by Rakesh Agarwal, a Chartered Engineer, and showing the presence of the appellants’ partner during verification. The appellants did not request cross-examination of the expert. The Commissioner rejected the appellants’ technical certificate dated 4-9-1997 on the ground it was issued 15 days after verification and the expert was involved with the Department during verification. The appellants failed to rebut the authenticity of the verification report or specifically deny the partner’s presence during verification in their appeal grounds. The Court found no reason to interfere with the impugned order and thus rejected the appeal.
Holding and Implications
The appeal is rejected.
The direct effect of this decision is the confirmation of the annual production capacity determination by the Commissioner based on the Department’s verification report. No new precedent was set; the decision affirms compliance with natural justice and proper procedural conduct in capacity determination under Section 3A of the Central Excise Act.
[Order per : V.K. Agrawal, Member (T)]. - In this Appeal, M/s. Ambica Industries are challenging determination of annual production capacity of their unit manufacturing high re-rolled products under Section 3A of the Central Excise Act and High Re-rolling Steel Mills Annual Capacity Determination Rules, 1997.
2. We heard Shri Bipin Garg, learned Advocate, for the Appellants and Shri Kumar Santosh, learned Senior Departmental Representative for the Revenue. The learned Advocate, submitted that hot re-rolled products were declared as notified goods under Section 3A of the Central Excise Act with effect from 1-9-1997; that a declaration was filed by the Appellants on 1-9-1997 giving parameters of their mill; that they have followed the same with a Certificate dated 4-9-1997 of an Expert Technical Authority M/s. Rakesh Agarwal and Associates certifying various parameters of their mill; that the Commissioner under Order No. 94/97, dated 29-9-1997 determined their annual capacity at 6590.638 MT; that on Appeal, the Appellate Tribunal vide Order No. 29/2000-B, dated 5-1-2000 remanded the matter for redetermination of the capacity after granting a personal hearing to the Appellants and supplying the copies of verification report. The learned Advocate, further, mentioned that initially the department furnished to the Appellants their verification report dated 29-11-1997 which was not the verification report relied upon in the earlier Adjudication Order; that on their request, the Department under their letter dated 7-5-2002 furnished a chart in which parameters of the mills of various units were mentioned; that the same was not a verification report as it was not signed by any one from their factory; that on the basis of such chart, the annual production capacity can not be determined; that the Department has also disregarded the Technical Expert Certificate dated 4-9-1997 supplied by them to the Department on 9-9-1997.
3. Countering the arguments Shri Kumar Santosh, learned Senior Departmental Representative, submitted that the verification report has been furnished to the Appellants under Commissionerate’s letter dated 7-5-2002; that the second column of the report given to the Appellants reads “name of factory, person present”; that in this column it is clearly written M/s. Ambica Industries, Shri Yash Pal Arora, partner which goes to show that Shri Yash Pal Arora, partner of the Appellants firm was present at the time of verification of the capacity; that the report has been signed by Shri Rakesh Agarwal and therefore, it can not be claimed by the Appellants that the verification of the parameters of their mill was not done by the Department with the help of an expert; that the Appellate Tribunal has remanded the matter vide Final Order No. 29/2000-B, dated 5-1-2000 only with the direction to redetermine the production capacity after furnishing the verification report that as the verification report has been furnished, the principles of natural justice has been complied with and the Order deserves to be upheld.
4. We have considered the submissions of both the sides. When the matter was heard by the Tribunal first time against the Order-in-Original No. 94/97, dated 29-9-1997, the Appellants had contended that they had submitted a representation in which the various parameters were given by them and the Commissioner had determined the production capacity at a much higher side taking into consideration the verification report submitted by the Assistant Commissioner in the said verification report which was not supplied to them. On account of these pleadings, the Tribunal remanded the matter to the jurisdictional Commissioner with the direction to redetermine the production capacity furnishing the verification report to the Appellants and after following the principles of natural justice. The Department had furnished the report under their letter dated 7-5-2002, which is also signed by one Rakesh Agarwal. The Appellants apparently had not asked for the cross-examination of said Rakesh Agarwal who is a Chartered Engineer. The Commissioner, after furnishing the verification report which also shows that Shri Yash Pal Arora, their partner was present at the time of verifying the parameters and after hearing the appellants in person, has passed the impugned Order determining the annual production capacity of the Appellants on the basis of said verification report. The Commissioner has also given a specific finding that the Certificate dated 4-9-1997 issued by the Chartered Engineer was given after the gap of 15 days from the date of verification and, therefore, he has not accepted the same. Moreover, the same Chartered Engineer was associated with the Department at verifying the parameters. The Appellants have not rebutted the fact that the earlier verification report has been signed by Rakesh Agarwal and Associates. We also observe that in the Memorandum of Appeal, it is not specifically averred by the Appellants that Shri Yash Pal Arora was not present at the time of verification. They have merely mentioned in the grounds of Appeal that the said report “is silent whether Shri Yash Pal Arora, partner was present at the time of verification”. The said Yash Pal Arora has only signed the Memorandum of Appeal on behalf of the Appellants firm and he should have clearly mentioned in the grounds of Appeal, that he was not present during the verification which he has not done. In view of this, we find no reason to interfere with the impugned Order. Accordingly, the appeal is rejected.
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