JUDGMENT

S.B. SINHA, J

1. Leave granted.

2.This appeal is directed against a judgment and order dated 11.02.2005 passed by a Division Bench of the Gujarat High Court in Tax Appeal No. 427 of 2004 whereby and whereunder the appeal preferred by the appellant herein from a judgment and order of the Customs, Excise and Gold Control Appellate Tribunal dated 22nd May, 2003 as well as Miscellaneous order dated 6th February, 2004, was dismissed.

3. The issue involved in this appeal is as to how the deemed annual production in terms of Section 3A of the Central Excise Act, 1944 which was brought into force with effect from 14.05.1987 should be determined. Appellant herein installed an induction furnace, the capacity whereof was 8 M.Ts. It had asked the Gujarat State Electricity Board (Board) for supply of 3000 KVA of electrical energy. The Board agreed to supply only 1900 KVA input of power. The said furnace was manufactured by Inductotherm (India) Ltd. Keeping in view the fact that the appellant could not obtain supply the requisite quantity of electrical energy, it thought of reducing the capacity of the said induction furnace. According to it, the capacity was brought down to 4 = M.Ts from 8 M.Ts. Appellant contends that the Department was informed thereabout. Allegedly, an inspection was carried out and the capacity of the said induction furnace was also noticed by the inspecting team. Despite the same, a show cause notice was issued as to why the deemed annual production should not be determined on the basis that the capacity of the said furnace was 8 M.Ts. A finding of fact was arrived at by the concerned authorities that the capacity of the said furnace was 8 M.Ts, and not 4 = M.Ts.

4. Mr. Gourab Banerjee, learned senior counsel appearing on behalf of the appellant, would submit that the appellant had obtained a certificate from M/s. Furcon Consultancy Services to show that the possible capacity of the furnace was 4.5 M.Ts. for melting steel and in view of the fact that the Board was not in a position to supply 3000 KVA at 11 KV to the Unit, the appellant had no other option but to reduce the capacity of the said furnace. In this connection, our attention has been drawn to the following letter dated 16.07.1997 issued by the Board: In connection to your letter cited above regarding increase in power requirement from 2400 KVA to 3000 KVA at 11 KV to your unit to Khakhariya, it is informed you that your total power requirement of 3000 KVA cannot be catered at 11 KV as per feasibility received from our field office.Please note that as per recent amendment condition No. 28 power requirement of 2500 KVA and above requirement to be catered at 66 KV or above voltage as per condition of supply. We are accordingly advising our E.E. (Const.) Amreli to send feasibility report.

5. A certificate dated 4.09.1997 was issued by a Chartered Engineer wherein the following observation was made: c.Crucibles are converted to 4500 Kg. capacity due to lack of power supply.

6. Our attention has also been drawn to a letter dated 7.04.2000 issued by the Customs and Central Excise, Commissionerate, Rajkot addressed to the Deputy Commissioner wherein it was stated: Parameters which are crucial for the determination capacity of production of the Induction furnace were measured in presence of the authorized person of the unit (Drawing of the measurement is enclosed herewith). As shown in the drawing the heating coils which wrapped around the Crucible Furnace are only upto Metal Level . Hence, only upto that level scrap can be melted. Weighment of Iron ingots, duly manufactured in during the visit were made. In each batch, number of ingots manufactured on an average taken from three batches comes to 42 nos. per batch. And the weight of five nos. of ingots from different batches was taken and the average weight of one ingot came to 98 kgs. Hence, average production on the basis of this calculation comes to 4.1 tones per batch. Moreover, one heat