Honble Rajes Kumar, J.—By means of present appeal, the appellant is challenging the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi dated 3rd June, 2008 by which the appeal filed by the Commissioner of Central Excise, Kanpur has been allowed.

2. The brief facts giving rise to the present appeal are that the appellant was engaged in the processing of man-made compounded fabrics and paying the duty under Section 3-A of the Central Excise Act (hereinafter referred to as the “Act”). The appellant filed a declaration for fixation of his annual capacity of his hot air stenter under Section 3-A of the Act. It appears that initially vide order dated 26th February, 1999, the Commissioner Central Excise Kanpur has fixed the annual production capacity provisionally in terms of value at Rs. 2953.44 lakhs but subsequently vide order dated 29th March, 1999, the annual production capacity has been fixed finally in terms of value, including gallery for stenter No. 1 as Rs. 885.324 lacs, for stenter No. 2 as Rs. 744.684 lacs, for stenter No. 3 as Rs. 744.684 lacs and for stenter No. 4 as Rs. 744.684 lacs with the monthly duty liability for stenter No. 1 as Rs. 9.443 lacs, for stenter No. 2 as Rs. 7.943 lacs, for stenter No. 3 as Rs. 7.943 lacs and for stenter No. 4 as Rs. 7.943 lacs. The above determination was made effective from 16th December, 1998. It appears that the appellant has not disputed the aforesaid fixation of annual production capacity and has accepted the order dated 29th March, 1999 inasmuch as no appeal against the said order was filed. However, the appellant has paid duty under protest.

3. It appears that the appellant had not paid excise duty from 16th February, 1998 to March, 1998 in accordance to the fixation of the annual production capacity as per order dated 29th March, 1999 within the specified time and could pay on 21st April, 1999, therefore, a show cause notice was issued by the Superintendent Central Excise, Range-V Division-I, Kanpur dated 23rd August, 1999 asking the appellant why interest on the late deposit be not demanded and the penalty under Rule 96-ZQ may not be levied.

4. It appears that the appellant filed a revised declaration under Notification No. 42/98-CE (NT) dated 10th December, 1998 on 13th August, 1999. A further fresh declaration was also filed on 17th April, 2000 vide letter dated 11th April, 2000 under Notification No. 26/2000 dated 31st March, 2000.

5. Thereafter, the appellant filed a refund claim on 18th July, 2000 for Rs. 12,08,829/-. The refund claim was made on the ground that stenter galleries were not included as per Explanation-1 of Rule 5 of the Hot Air Stenter Independent Textile Processor Annual Capacity Determination Rule 1998; stenter galleries are not aiding the process of heat setting or drying of the fabrics, the excise duty was paid under protest. The said refund claim was rejected by the Deputy Commissioner Central Excise Division-II Kanpur vide order dated 4th October, 2000. It has been mainly rejected on the ground that against the order of the Commissioner fixing the annual production capacity vide order dated 29th March, 1999, including gallery for stenter has not been challenged by the appellant. The duty was paid as per the order of the Commissioner Central Excise, referred hereinabove, and in the refund claim the order of the Commissioner cannot be challenged. In support of the contention reliance is placed on the decision of the Apex Court in the case of Collector of Central Excise, Kanpur v. Flock (India) Pvt. Ltd., 2000 (120) ELT 285 (SC).

6. Being aggrieved by the order, the appellant filed appeal before the Commissioner Central Excise (Appeals). The appeal was allowed vide order dated 31st December, 2003 on the ground that firstly; party had paid duty under protest through TR-6/Challan; secondly the G.O.’s modified the Rules and the Galleries were excluded from the measurement of the chamber; and thirdly it had been held by Hon’ble