TMI Blog2009 (5) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... d not warrant levy of penalty as the said amendment had come into force on 1-5-98 and whatever dues remained after 1-5-98, those could be subject to levy of penalty. In this view of the matter, the penalty imposed in relation to the amount of duty demanded for the period starting from 2-9-97 to 6-4-98 amounting to Rs. 13,33,334/-, the same could not be imposed. The penalty would be leviable only in relation to the amount of duty for the period from 14-7-98 to 29th July, 99 – Further, It is pertinent to note that the issue regarding limitation in terms of Section 11A of the said Act was neither raised before the lower authorities nor even in the memorandum of appeal filed in this Tribunal. In fact, the point was sought to be raised for the first time in the course of arguments. The point of limitation is not a pure question of law. It is essentially mixed question of law and facts - Considering the two decisions of the Apex Courts, the Larger Bench of this Tribunal in Mohinder Steels case, has clearly ruled that the time limit prescribed under Section 11A would not be attracted in relation to Compounded Levy Scheme under Rule 96ZO. – Further, in tax matters, if the condition is esse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had submitted necessary intimation regarding closure of furnace for the periods from 2-12-97 to 9-12-97, 20-12-97 to 1-1-98, 10-1-98 to 27-1-98, 4-2-98 to 14-2-98 and 4-3-98 to 17-3-98 under their intimation letters dated 2-12-97, 19-12-97, 1-1-98, 9-1-98, 27-1-98, 3rd and 4th February, 1998. Consequent to such intimations, the show cause notice came to be issued on 12-1-99 regarding the abatement claim and Commissioner, by order dated 9-10-03 disallowed the same. 5. In the duty appeal, the Department had issued a show cause notice dated 29-8-02 on account of failure of the appellants to discharge the duty liability to the tune of Rs. 92,16,668/- for the period September, 1997 to July, 1999 and the adjudicating authority i.e. the Commissioner by his order dated 27-2-2004 confirmed the demand duty to the tune of Rs. 15,91,398/- and directed the payment of interest thereon besides equal amount of penalty while exercising powers under Rule 96ZO(3)(ii) along with the powers under Sections 11A, 11AB and 11AC of the said Act. 6. The appellants have challenged both the orders on various grounds. The order rejecting the abatement claim is sought to be challenged on the ground that Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers totally ignored the most important fact that the factory premises of the appellants had remained closed for a considerable time as stated in various intimation letters as also the appellants were dis-possessed of the said premises on 21-3-98. The factum of closure of the premises was also established from the fact that electric supply was disconnected. He further submitted that considering the law laid down by the Apex Court which is revealed from the judgments relied upon by the Revenue authorities themselves, is that the authorities could not have merely on the basis of non-compliance of technicalities in relation to the procedural matters denied the abatement claim of the appellants, nor could have demanded the duty and imposed penalty. He further submitted that there was no case made out by the Department for invoking the extended period of limitation in relation to demand of duly and for the same reason, there was no occasion for imposition of penalty. He also submitted that once the Revenue authorities themselves had found it necessary to issue the show cause notice, it was highly improper for the Commissioner to observe that there was no need to issue show cause notice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of whatever material available on record. It is, his further submission that the authorities have taken into consideration the provisions of law and failure to comply thereof by the appellant and bearing in mind the law laid down by the Apex Court in that regard, it cannot be said that the authorities have acted either arbitrarily or in contravention of provisions of law. He also submitted that it is settled law that when the statute requires a particular thing to be done in a particular manner, it has to be done in the same manner and in no other manner. That being the law, the appellant cannot be allowed to contend that they could have followed the procedure of their own choice which had no support from the statutory provisions and therefore their contention about substantial compliance of the procedural requirement has to be rejected. He further submitted that the procedural provisions have been made in order to enable the Revenue authorities to verify the factual situation in the matter of manufacture of products so as to have appropriate check and the records maintained by the assessee are not allowed to manipulate to enable the assessee to evade the duty liability which it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible as the same could facilitate the commission of fraud and may introduce administrative inconvenience. It was specifically ruled that presumably to achieve the twofold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the provision of law. 12. In Chandra Kishore Jha case (supra), the Apex Court held that it is well settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. 13. In Indian Aluminium Co. case (supra), the Apex Court while dealing with the requirement of declaration in a prescribed form in terms of Octroi Rules applicable to the area under jurisdiction of Thane Municipality in the State of Maharashtra held that "the declaration contemplated in Form 14 is to the effect that the goods imported shall not be used for any other purpose, for sale or otherwise etc. It can thus be seen that an incentive sought to be given to such entrepreneurs by such concession if the raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od, is Rs. 750/- per tonne, at the time of clearance. Total amount of duty should be paid by the 31st March of relevant financial year, otherwise interest at the rate of 18 per cent. per annum is payable and if the duty has not been paid by this date penalty is also payable which is equal to outstanding duty or Rs. Five thousand whichever is greater. Sub-rule (2) thereof provides that if no ingots and billets are produced for a continuous period of seven days, the manufacturer may claim abatement by following appropriate procedure. Sub-rule (3) thereof envisages a composition method of payment of duty. Manufacturers of ingots and billets with furnace capacity of 3 tonnes have an option of paying duty of Rs. Five lakhs per month in two equal instalments prior to 15th of a month and by last date of that month. Such payment is treated to be in full discharge of duty liability. The Rule specifically excludes application of Section 3A(4). But manufacturers opting for this composite scheme cannot claim abatement. If the furnace capacity is less than or more than 3 tonnes payment of Rs. 5 lakhs can be varied on pro rata basis. The manufacturer opting for this composite scheme has to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction". It was also held therein that construction which result in inequitable results and is incongruous has to be avoided. 19. The Himachal Pradesh High Court in Spectra Electronics case (supra) referred to the decision of Apex Court in Indian Aluminium Co. Ltd. v. Thane Municipal Corporation [1992 Supp (1) SC 480] while holding that even the procedural requirement of law are required to be fulfilled once they are found to be mandatory in nature. 20. If one peruses the provisions comprised under Rule 96ZO, the same prescribe in detail the procedure to be followed in the matter of valuation and payment of duty relating to manufacture of ingots and billets. Undisputedly, these provisions are in furtherance of the object to be attained in terms of Section 3A of the said Act. The Apex Court in Venus Casting (supra) has dealt with in detail about the procedure to be followed by the manufacture of ingots and billets in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces specified thereunder, subject to the conditions which are required to be fulfilled to avail such facility. The conditions prescribed thereunder are to the effect that manufacturer shall inform in writing about the closure to the Assistant Commissioner either prior to the date of closure or on the date of closure. He shall intimate the reading of the electricity meter immediately after the production in his factory has stopped alongwith the closing balance of ingots and billets of non-alloy steel; he shall inform in writing about the starting of production either prior to the date of starting the production or on the date of starting of production, he shall also intimate about the start of the production along with closing balance of stock on restarting of the factory and the intimation regarding the restarting of the production should be sent with a declaration that the factory had remained closed for a continuous period starting from the time to be specified along with the date and till the time along with the date, i.e. a period during which the factory has remained closed. 23. It is not in dispute that the appellants did not inform about the closure and starting of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as at a time of recommencement of production; and (2) the exact time of closure of factory and the timing at which the closure comes to an end. Undisputedly, some of the letters disclose the closing stock of ingots and other items with the appellant at a time of closure as well as recommencement of the furnace. The letters also refer to timing of closure or the commencement of the furnace. However, the letter dated 2nd December does not disclose exact time of the closure, apart from the fact that it was submitted on 5th of December though the closure was from 2nd December. Then, the letter dated 9th December informs shutting down of furnace from the following day at 8 hours but does not disclose the closing stock. The letter dated 1st January regarding recommencement of furnace disclose the time to be of 8 hours on 1st January. However, it was submitted on 2nd January and does not disclose the opening stock. The letter dated 1st January which was submitted on 5th January disclose that the furnace had restarted at 8 hours on 1st January and it also refers to the closing stock at the time of start of the furnace. The letter dated 9th January is regarding the closure of furnac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the time factory is in operation. 27. The contention on behalf of the appellant that it is a procedural requirement and therefore, bearing in mind the law laid down by the Apex Court in Managalore Chemical Fertilisers Ltd., the same cannot be construed as mandatory requirement and a substantive compliance thereof should be construed as sufficient to enable the manufacturer to avail the benefit thereunder, cannot be accepted. The Apex court has nowhere held that requirement of the nature of conditions provided under sub-rule (2) of Rule 96ZO are non-mandatory in nature, nor the Apex Court has held that every procedural requirement to be considered as non-mandatory. 28. The Apex Court in Managalore Chemical Fertilisers case (supra) was dealing with a notification issued by Government of Karnataka under Section 8A of the Karnataka Sales Tax Act, 1957 for giving certain incentives to entrepreneurs by starting new industries in the State, pursuant to State's policy for 'rapid industrialisation'. In that case, one of the entrepreneurs who had applied for benefit under said notification was not granted the same on account of certain outstanding inter-departmental issues bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Apex Court in Managalore Chemical Fertiliser case (supra) therefore reveals that Apex Court has clearly held that the conditions attached to any exemption notification are concerned, the right of assessee to avail such exemption should be considered on the basis of the purpose which is intended to be served by compliance of conditions attached to such exemption notification. The Apex Court in Managalore Chemical Fertiliser case has clearly held that the authorities are required to ascertain the stringency and mandatory nature of the notification on the basis of purpose which is intended to be served by the condition attached to the notification. The expression "There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure" cannot be read de hors the context in which the said observation has been made by the Apex Court in the facts and circumstances of the case before it. It is true that in most of the cases, the conditions relating to a procedure can be construed as non-mandatory, but it is not an universal rule and it would depend upon the nature of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and is accordingly answered. 33. As regards the demand of duty it is seen that the same has been confirmed for the period from 2-9-97 to 6-4-98 and further from 14-7-99 to 29-7-99, after crediting the amount already paid, the balance due has been confirmed to be Rs. 15,91,398/-. It is pertinent to note that the issue regarding limitation in terms of Section 11A of the said Act was neither raised before the lower authorities nor even in the memorandum of appeal filed in this Tribunal. In fact, the point was sought to be raised for the first time in the course of arguments. The point of limitation is not a pure question of law. It is essentially mixed question of law and facts. The point of limitation would depend upon the facts which could reveal whether the action had been initiated within a period prescribed for the same or not. For that purpose, the date on which the cause for initiating action had arisen is of great importance. Fixing of such date would depend upon the facts of each case. Consequently, therefore, the issue of limitation cannot be held to be a pure question of law. Such an issue requires to be specifically raised at the earliest opportunity. The party require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng after the expiry of period so stipulated has the consequence of creation and destruction of rights and therefore must be specifically enacted and prescribed therefore. It is not for the Courts to import any specific period of limitation by implication, where there is really none, though Courts may always hold when any such exercise of power had the effect of disturbing rights of a citizen that it should be exercised within a reasonable period. Section 11A is not an omnibus provision which provides any period of limitation for all or any and every kind of action to be taken under the said Act or the Rules framed thereunder but will be attracted only to cases where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded. The section also provides for an extended period on certain contingencies and situations. The situation which has to be dealt with under Rule 57-I as it stood unamended would not fall under any of those contingencies provided for in Section 11A of the Act. In Venus Casting case, the Apex Court had clearly ruled that Section 3A empowers Government to charge excise duty on the basis of capacity of production in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises. The said letter refers to the closure of the premises. In other words, at the most, it could have been treated as an intimation of closure of factory. It is also pertinent to note that in spite of ample number of opportunities given to the appellants, they failed to appear before the authority. In other words, even assuming that the appellants wanted to contend that letter dated 21-3-98 was in respect of intimation pertaining to dis-possession of the appellants from the premises, there was no occasion for the authority to read any such thing in the said letter in the absence of proper explanation in that regard in the matter as admittedly no such explanation as regards the said letter dated 21-3-98 was ever forwarded to the Revenue authorities. Besides, as already stated above, the provision of sub-rule (2) of Rule 96ZO are not attracted in the case of appellants factory in question. Being so, we wonder as to how the letter dated 21-3-98 could convey and establish the claim of alleged dis-possession from the factory premises. Besides, the question of dispossession from the factory premises is a question of fact to be established by producing proper evidence in that regard on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o been the case of the appellant right from the beginning that there was stoppage of production intermittently as also disturbance to the production by some other company 'M/s. Ishar Alloy (P) Ltd. Undoubtedly, the Revenue authorities do not appear to have considered all these aspects while dealing with the matter of imposition of penalty. It is however, submitted on behalf of the respondent that there is no discretion left for the authorities and once the manufacturer is found to have defaulted, consequence provided under the statute would have follow and result in imposition of penalty. It has also to be noted that the Apex Court in Dharamendra Textile Processors case has clearly ruled that the concept of discretion in the matter of imposition of penalty is foreign to the proceedings under Rule 96ZO. However, one aspect is required to be considered and that is the provision regarding penalty in relation to the default in payment of duty under Rule 96ZO(3) was introduced by way of amendment to the said Rules which came into force with effect from 1-5-98. Considering the same, it is the contention on behalf of the appellant that penalty, if at all, could be levied for the period fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
