TMI Blog2003 (9) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of MS Ingots/Billets, hereinafter referred to as goods, falling under Chapter sub-heading 7206.90 of the CETA the, goods were liable to duty in terms of the provisions of Section 3A of the CEA 1944 based on Annual Capacity of Production (ACP) in the manner as prescribed under the provision of Rule 96ZO of the CER. The manner in which the aforesaid ACP is to be determined by the Commissioner is set out in Sub-rule 1 of Rule 3 of the Induction Furnance Annual Capacity Determination Rules 1997, hereinafter referred to as the said Rules. Accordingly based on the declaration dated 11.9.1997 filed by the appellants which was supported by a certificate dated 30.8.1997 of the supplier, the commissioner, Central Excise, 30.8.1997 of the supplier, the Commissioner, Central Excise, Jamshedpur vide his order dated 23.3.1998 finally fixed the ACP of the furnace of the assessee as 9600 MT. Since the assessee opted vide their letter dated 11.9.1997 for payment of duty on the goods under the provisions of Sub-rule 3 of the Rule 96ZO of the CER 1944, the assessee was required to pay duty @ ₹ 5,00,000/- only per month. Inasmuch as the fixation of ACP done was on the declaration of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared for the assessee while Shri PK Mondal learned SDR appeared for the Revenue. The learned Counsel for the assessee reiterated the grounds of appeal while the learned SDR reiterated the findings of the Commissioner. After the hearing, the order was reserved. On 11.7.2003 the assessee again submitted a synopsis wherein it is inter alia stated as under: (a) The Commissioner of Central Excise vide order dated 23.3.1998 finally fixed the ACP of the furnance as 9600 MT in terms of the formula mentioned in Rule 3(3) of the Capacity Determination Rules. 1997. Similarly in respect of the furnance installed in 1999 also the ACP was finally determined by the Commissioner as 9600 MT by taking the capacity of the furnance as 3 MT. (b) The appellants opted to pay duty @ ₹ 5,00,000/- per month in terms of Rule 96ZO(3) of the CE Rules, 1944 instead of payment of duty ₹ 750/- per MT for 96000 MT in terms of Rule 96ZO (1). (c) The Commissioner after investigation about the capacity of the furnance issued show cause notice dated 14.9.1999 to the appellants on the ground that the capacity of the furnace was not 3 MT as declared by the appellants, but should be 3.6 MT in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner failed to consider this document and directly gone by some other document which is the third option available as per the provisions of Rule 3(2) of the rules ibid. The Commissioner can consider any other material only if the invoice of the manufacturer/supplier of the furnace is not available and also invoice of the manufacturer/supplier in respect of comparable furnaces installed in any other factory is not available. The Commissioner in the present case had gone by materials other then the invoice of the manufacturer/supplier of the furnace and hence the impugned order is not correct. (h) The Commissioner has to determine the annual capacity based on the invoices of the supplier and not on the certificate issued by the manufacturer in terms of the decision in the case of Jairaj Ispat v. CCE and Granpathi Industries v. CCE reported in 2000 (40) ELT 308 (i) In any case the Commissioner has finally determined the ACP as 9600 MT vide order dated 23.3.1998 and hence he cannot re-determine the ACP Reliance is placed in the case of Govind Mills Ltd. v. CE reported in 2002 (147) ELT 1106 : 2002 (104) ECR 746 (T) (j) In any case and without prejudice to the above, if re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the relevant provisions of the Act and the Rule made hereunder in regard to Fixation of ACP. Section 3A of the Act reads as under: Section 3A. Power of Central Government to charge Excise duty on the basis of capacity of production in respect of notified goods- (1) Not-withstanding 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 such goods or such other factors as may be relevant, is of the opinion that it is necessary to safeguard the interest of revenue, specify, by notification in the Official Gazette, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section. (2) Where a notification is issued under Sub-section (1), the Central Government may, by rules, provide for determination of the annual capacity of production, or such factor or factors relevant to the annual capacity of production of the factory in which such goods are produced, by the Commissioner of Central Excise and such annual capacity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capacity of the furnaces installed in the induction furnace unit on the basis of the capacity of comparable furnaces installed in any other factory in respect of which the manufacturer's invoice or other document indicating the capacity of the furnance is available or, if not so possible, on the basis of any other material as may be relevant for this purpose. The Commissioner may, if he so desires, consult any technical authority for this purpose; (3) the annual capacity of production of ingots and billetes of non-alloy steel in respect of such factory shall be deemed to be as determined by applying the following formula: ACP = TCF X 3200, where- ACP = Annual Capacity of Production of the factory producting ingots and billets of non-alloy steel in metric tonnes; and TCF = Toral capacity of the furnaces installed in the factory producing ingots and billets of non-alloy steel in metric tonnes. (4) the Commissioner of Central Excise shall, as soon as may be, after determining the total capacity of furnaces installed in the factory as also the annual capacity of production by an order intimate to the manufacture. 4. The capacity of production for any part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Superintendent of Central Excise, either prior to the date of starting production or on the date of starting production; the manufacturer shall on start of production again along with the closing balance of stock on restarting the factory, intimate the reading of the electricity meter to the assistant Commissioner of Central Excise, with a copy to the Superintendent of Central Excise; (e) the manufacturer shall while sending intimation under Clause (c), declare that his factory remained closed for a continuous period starting from - hours on - (date) to - hours on - (date) [(3) Notwithstanding anything contained slsewhere in these rules, if a manufacturer having a total furnance capacity of 3 metric tonnes installed in his factory so desires, he may, from the first day of September, 1997 to the 31st day of March, 1998 or any other finacial years, as the case may be, pay a sum of rupees five laks per month in two equal instalments, the first instalment latest by the 15th day of each month, and the second instalment latest by the last day of each month, and the amounts so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest at the rate of eighteen per cent, per annum on such outstanding amount calculated for the period from the 1st day of April, 1998 till the date of actual payment of the outstanding amount: Provided that if the manufacturer fails to pay the total amount of duty payable under Clause (a) by the 30th day of April, 1998, he shall also be liable to pay a penalty equal to the outstanding amount of duty as on 30th day of April, 1998 or five thousand rupees, whichever is greater.] II. Total amount of duty liability for a financial year subsequent to 1997-1998 (a) a manufacturer shall pay a total amount calculated at the rate of ₹ 750/- per metric tonne on the annual capacity of production of his factory as determined under the Induction Furnance Annual Capacity Determination Rules, 1997. This amount shall be paid by the 31 st day of March of the finacial year; (b) the amount of duty already paid, together with on-account amount paid by the manufacturer, if any, during the financial year shall be adjusted towards the total amount of duty liability; (c) if a manufacturer fails to pay the total amount of duty payable under Clause (a) by the 31st day of March, of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d second options noted above and has proceeded to fix the ACP provisionally be order dated 7.10.1997 and finally by order dated 23.3.1998 without mentioning on what basis he has done so. He has neither referred to any invoice of any one nor the material collected nor about the expert opinion he has based for such fixation. We are at a loos to understand as to how the Commissioner without any of the prescribed document, without application of mind and totally in disregard of the clear provisions of the Rule proceeded to fix the ACP as indicated above. We are therefore of the considered opinion that the ACP fixed by the Commissioner was not in accordance with law and on this score alone, the impugned order is liable to set be set aside. We also note that his reliance of the material collected by the officers of the department who are not technically qualified, was in spite of the fact that he had sought techinical opinion from the NML and which opinion was made available to him. We do not understand the rationale behind such move by the Commissioner. The assessee has relied upon the ruling of the Tribunal in the case of Jairaj Ispat Ltd. v. CCE wherien it was held that annual capacit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tus officio to re-determine the ACP. The broader possibilities were required to be examined and we cannot get swayed by such deficiency. Therefore, this case law does not come to the rescue of the assessee and we are of the considered opinion that in the facts and circumstances of this case, it cannot be said that the Commissioner was not right in proceeding to re-determine the ACP. 9. Coming to the next question, as to in respect of which Induction furnace the final order dated 23.3.1998 determining the ACP has been passed, we observe that in the instant case, the assessee has stated in thesynopsis that one Induction Furnace was installed in the factory of the assessee in 1997 and another one in 1999 and the show cause notice proposed to fix the ACP of both the furnaces. We note that there are three show cause notices dated 14.9.1999, 27.9.1999 and 3.3.2000. In all these show cause notices it is stated that the assessee through their letter dated 24.9.1997 submitted certificate dated 30.8.1997 of the supplier and it was based on that certificate. The Commissioner had finally fixed the ACP vide his order dated 23.3.1998. The order impugned also deals with only one induction furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 10 of the said judgment is reproduced below for convenience of reference. 10. The schemes. Contained in Section 3A(4) of the Act and Rule 96ZO(3) or Rule 96ZP(3) of the Excise Rules are two alternative procedures to be adopted at the option of the assessee. Thus the two procedures do not clash with each other. If the assessee opts for procedure under Rule 96ZO(1) he may opt out of the procedure under Rule 96ZO(3) for a subsequent period and seek the determination of annual capacity of production. An assessee cannot have a hybrid procedure of combining the procedure under Rule 96ZO(1) to which Section 3A(4) of the Act is attracted. The claim by the respondents is a hybrid procedure of taking advantage of the payment of lumpsum on the basis of total furnace capacity and not the basis of actual capacity of production. Such a procedure cannot be adopted at all, for the two procedures are alternative schemes of payment of tax. In terms of the above cited judgment of the Hon'ble Apex Court the assessee can opt out of the scheme during the subsequent financial year and he is not permitted to opt of the scheme during the particular financial year for he has already given an op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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