TMI Blog2023 (5) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scheme under Rule 96ZP (3) of the Central Excise Rules, 1944 on introduction of compounded levy scheme under Section 3A of the Central Excise Act, 1944 w.e.f. 01.09.1997. However, they opted vide their letter dated 11.01.1999 to avail the scheme under Rule 96ZP (3) of the Central Excise Rules, 1944. Since the assessee did not opt for the scheme at the time of introduction of compounded levy, they were liable to discharge duty in terms of Rule 96ZP(1) of the Central Excise Rules, 1944, till they specifically exercised the option of 96ZP(3). Thus, the contention of the Department is that the Appellant are liable to pay duty in terms of 96ZP(1) for the financial years 1997-98 and 1998- 1999 and at the rate prescribed under 96ZP(3) for the year 1999-2000. Since the Appellant has not paid the duty on the basis of the ACP fixed for the period 01/09/1997 to 31/03/2000, the Appellant was asked to pay differential duty of Rs 2,94,196, vide the Impugned Order. The Order passed by the Commissioner is as follows: 30. In view of the foregoing, I fix the Annual Capacity of Production of the Re-rolling Mill of the assessee as 1106.820 Mt for the year 1997- 98, 1998-99, 1999-2000 in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any stage of the proceedings. Since the dispute has not been extinguished the appellant was eligible to pay the duty on actual production in terms of the provisions of section 3A(4) for the years 1997-98 1998-99. For the year 1999-2000, since they submitted the option to pay duty under Rule 96ZP(3), they are required to pay the duty on the basis of determination of annual capacity of production under the provisions of Hot-Rolling Mills Annual Capacity Determination Rules, 1997. Accordingly, they contended that the order of the Ld. Commissioner is not proper and valid. In case, they are allowed to pay the duty on the basis of the actual production, they are not required to pay any differential duty as confirmed in the Impugned Order. 6. The Departmental Representative reiterated the findings of the Commissioner in the Impugned Order. Regarding the demand for waiver of interest and penalty , he admitted that the decision of the Hon ble Supreme Court in the case of Shree Bhagawati Steel Rolling Mills Vs Commissioner of Central Excise, reported in 2015 (326) ELT 209 (S.C.) will be applicable to this case also. 7. Heard both sides and perused the documents available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner. 11. We find that 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. For the sake or ready reference, Rule 3A(4) referred by the Appellant is reproduced below: 12. Rule 3(A) 3A. Power of Central Government to change Excise duty on the basis of capacity of production in respect of notified goods. (1) Notwithstanding anything contained in section 3, where the Central Government having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of duty in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise Rules, 1944 as ultra vires. Relevant Para of the said judgement is reproduced:- 44. Conclusion We have declared in this judgement that the interest and penalty provisions under the Rules 96ZO, ZP and ZQ of the Central Excise Rules, 1994 are invalid for the reasons assigned in the judgment. Accordingly, the appeals filed by the Revenue are dismissed and the appeals filed by the assessee are allowed to the extent indicated above. It may be noted that in an appeal from the judgment of the Allahabad High Court dated 8-11-2012 in SLP (C) No.9796/2013, it has been held that the levy of penalty under the aforesaid provisions is mandatory in character. In view of what has been held by us today, this appeal will also have to be allowed in the same terms as the other assessee s appeals which have been allowed. All the aforesaid appeals are disposed of accordingly. 15. In view of the above discussion, we hold that the demand of interest and penalty in the Impugned Order is not sustainable. 16. In view of the above, we uphold the demand of duty confirmed in the impugned order and set aside the interest and penalty demanded in the said Order. (Order pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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