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2023 (5) TMI 238 - CESTAT KOLKATACompounded levy scheme - demand on the basis of fixation of Annual Capacity of Production of the Re-rolling Mill as 1106.820 Mt for the year 1997- 98, 1998-99, 1999-2000 in terms of Rule 3(1) of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 - demand of differential Excise Duty, interest and penalty - HELD THAT:- When the ACP Scheme was introduced w.e.f. 01/09/1997, the Appellant has not exercised any option either under 96ZP(1) or under 96 ZP(3). They exercised the option for the first time only on 11/01/1999 to avail the scheme under 96ZP(3). As this option cannot be exercised in the middle of a financial year, the option exercised by them will be applicable only for the financial year 1999-2000. Thus, for the period from 01.09.1997 to 31.03.1999 the Appellant automatically falls under the provisions of Rule 96ZP(1) of the erstwhile Central Excise Rules, 1944. The Appellant has not paid the duty as per the ACP fixed by the Commissioner for the years 1997-1998 and 1998-1999. The Appellant’s contention is that they have not opted for payment of duty under 96ZP(3) and hence they are liable to pay duty under Rule 96ZP(1) only. Once their request for payment of duty under 96 ZP(1) is accepted, they are eligible to pay duty on the basis of actual production in terms of the provisions of Section 3A(4) of the Central Excise Rules, 1944. Their actual production is much less than the capacity determined by the Commissioner and they have paid duty as per the actual production and hence the differential duty demanded is not sustainable. As per the provision of Rule 3(A), when an assessee claims that their actual production is lower than the ACP determined by the Commissioner, then the Commissioner has to determine the actual production and re-determine the amount of duty payable on the basis of such actual production. This re-determination has to be done by the Commissioner based on the evidence produced by the assessee to show that their actual production is much less than the ACP fixed. However, in the present case, the Appellant has not submitted any evidence before the Commissioner for re-determination of the ACP and fixing of the duty based on actual production. In the absence of any redetermination done by the Commissioner, the ACP fixed by the Commissioner @ 1106.82 MT per annum remains and the assessee needs to pay duty as per ACP fixed. In the instant case, the assessee has paid duty based on actual production and not on the basis of ACP fixed. Hence, the differential duty demanded and confirmed by the Impugned Order is sustainable. Accordingly, the demand of duty confirmed in the Impugned Order is upheld. Interest and penalty - HELD THAT:- The Hon’ble Supreme Court in the case of M/S. SHREE BHAGWATI STEEL ROLLING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE & ANOTHER [2015 (11) TMI 1172 - SUPREME COURT] held that the provisions of interest and penalty under Rule 96ZP of the Central Excise Rules, 1944 as ultra vires - the demand of interest and penalty in the Impugned Order is not sustainable. The demand of duty confirmed in the impugned order upheld and the interest and penalty demanded in the said Order set aside - appeal allowed in part.
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