2011 (3) TMI 2 - SC - Central Excise

Recovery of amount due under compounded levy scheme - application of period of limitation - Section 11A of the Central Excise Act 1944 - Held that - In the case of Collector of Central Excise Jaipur V. Raghuvar (India) Ltd as reported in (2000 -TMI - 45411 - SUPREME COURT OF INDIA) this court has categorically stated that Section 11A of the Act is not an omnibus provision which stipulates limitation for every kind of action to be taken under the Act or Rules. An example can be drawn with the Modvat Scheme because even in that particular scheme Section 11A of the Act had no application with regard to time limit in the administration of that scheme. Importing of elements of one scheme of tax administration to a different scheme of tax administration would be wholly inappropriate as it would disturb the smooth functioning of that unique scheme. The time limit prescribed for one scheme could be completely unwarranted for another scheme and time limit prescribed under Section 11A of the Act is no exception.

Summary

Issues:
Whether the provisions of time limit in Section 11A of the Central Excise Act, 1944 apply to the recovery of amounts under the compound levy scheme for Hot-Re-rolling mills under the Annual Capacity Determination Rules 1997?

Analysis:
The case involves the consideration of whether the time limit provisions in Section 11A of the Central Excise Act, 1944 are applicable to the recovery of amounts due under the compound levy scheme for Hot-Re-rolling mills under the Annual Capacity Determination Rules 1997. The appellants manufactured iron and steel products chargeable to Central Excise Duty under Section 3A of the Act, where duty was to be paid based on the annual production capacity of the plant, as per Rule 96ZP of the Central Excise Rules. The Commissioner determined the annual capacity to be 3355 MT. The Tribunal remanded the matter for re-determination, leading to subsequent disputes and legal proceedings.

The appellants argued that Section 11A of the Act is mandatory for recovery of any duty short levied or paid, emphasizing the procedural requirements for issuing notice and determining the amount. On the other hand, the respondents contended that under the Compound Levy Scheme, the appellants opted for duty payment at compounded rates based on approved applications and declarations of annual production capacity and duty payable.

The Supreme Court analyzed the scheme under which the appellants were operating, highlighting that the compound levy scheme for duty collection based on annual capacity of production is distinct from the normal scheme for excise duty collection. The Court referred to previous judgments emphasizing that Section 11A of the Act does not apply to recovery under different schemes. The Court cited cases such as Commissioner of C. EX & Customs v. Venus Castings (P) Ltd and Union of India v. Supreme Steels and General Mills to support the principle that the compound levy scheme operates independently with its own provisions.

Further, the Court referenced the case of Collector of Central Excise, Jaipur V. Raghuvar (India) Ltd to establish that Section 11A of the Act does not set a general time limit for all actions under the Act or Rules. The Court agreed with the Tribunal's decision that applying time limits from one tax administration scheme to another would disrupt the unique functioning of each scheme. Consequently, the Court dismissed the appeals, finding no merit in applying the time limit provisions of Section 11A to the compound levy scheme for Hot-Re-rolling mills under the Annual Capacity Determination Rules 1997.