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M/s Vikas Metroll Pvt Ltd Versus Commissioner of Central Excise, Kanpur

Determination of duty on the basis of Annual Production Capacity under Section 3A - fixation of the capacity of the Furnace - appellant contended that the capacity has been determined incorrectly and also on the grounds that with omission of the section 3A of the Central Excise Act, without any saving clause, the proceedings initiated under the said section cannot continue and would lapse. - Held that:- In the instant case the SCN has been issued prior to 1.3.2001, the capacity has not been fina .....

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he appeal. The proceedings initiated in the letter of Commissioner dated 14.11.1998 for fixation of capacity different from the declaration originally filed by appellants would lapse, since the same has not been finalized before omission of Section 3A. - Decided in favor of assessee. - Appeal No. E/689/2006 - Dated:- 16-10-2015 - Anil Choudhary , Member (J) And Raju , Member (T) For the Appellant : Shri A R Krishnan, Adv For the Respondent : Shri Ahibaran , Addl. Commissioner (AR) ORDER Per Raju .....

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he capacity of the furnace was provisionally fixed by the Commissioner. However, the appellant contested the fixation of capacity on the grounds that they have only one crucible. In March, 1998, the capacity of the production was finally fixed at 5.2 MT. The appellant challenged the order before Tribunal challenging the fixation of capacity and claiming assessment on the basis of actual production. The Tribunal remanded the matter back to the Commissioner. In November, 1998, the Commissioner re- .....

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production. However, for the purpose of determination of capacity, the matter was remanded back to the Tribunal. The appellant filed a review petition, which was dismissed. In September, 2001, the Tribunal remanded the matter to Commissioner again for determination of capacity. In December, 2005, the Commissioner re-determined the capacity in terms of Rule 96ZO( 3) of Central Excise Rules, 1944. The appellants are in appeal against the said order on the grounds that the capacity has been determi .....

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r, the aforesaid observations would be subject to what is held in respect of the second question viz., whether after the omission of Section 3A of the Act with effect from 11th May, 2001 proceedings initiated under Rules 96ZQ, 96ZP and 96ZO of the Rules would survive? 17.1 Dealing with the second question, Section 3A of the Act enables the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. This clause came to be inserted in the Act by th .....

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rules to be framed under Section 3A(2) of the Act by the Central Government. Thereafter, the assessee would be liable to pay duty based on such determination. 17.2 Rule 96ZQ of the Rules which provides for procedure to be followed by independent processors of textile fabrics, comes into play after the Commissioner of Central Excise determines the annual capacity of production on processed textile fabrics under Section 3A of the Act read with the Hot Air Stenter Independent Textile Processors Ann .....

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f an enactment and as such, the provisions of Section 6A of the General Clauses Act would be applicable and all proceedings and liabilities incurred under the omitted provisions would be saved. A Constitution Bench of the Supreme Court in the case of M/s. Rayala Corporation (supra) held that Section 6 of the General Clauses Act would not apply to the omission of a provision in an Act but only to repeal, omission being different from repeal. The aforesaid view has been reiterated by another Const .....

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ction. However, the first part namely that Section 6 of the General Clauses Act only applies to repeals and not to omissions would be squarely applicable to the facts of the present case. Reliance placed by the Revenue on the decision of the Supreme Court in the case of General Finance Company (supra) is misconceived inasmuch as in the said case the Supreme Court after finding force in the submissions advanced by the learned counsel, observed that it was constrained to follow the two decisions o .....

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ct but only to repeal, omission being different from repeal as held in the said decisions." 2.1 The learned Counsel asserted that after omission of Section 3A of the Central Excise Act, the proceedings initiated under the said Section and the Rules thereunder do not survive. He asserted that in the identical circumstances in the case of M/s Alwar Processors Pvt. Ltd. Vide Final Order No. A/51466/201- EX( DB) dated 12.2.2014 , and in the case of M/s Shiv Raj Wires Ltd. Vide Final Order No. 5 .....

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ior to omission of Section 3A. He asserted that the appellants have declared the higher capacity in the declaration in 1997. He supported the findings of the order. 4 We have considered the rival submissions. Before we go into merits of the case the issue to be decided is if the proceedings initiated under Rule 96ZO survive after omission of Section 3A. 4.1 Interpreting the Hon'ble High Court's judgment in case of M/s Krishna Processors (supra), the Tribunal in case of M/s Alwar Processo .....

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f Rule 96ZQ of the Rules M( i ) with effect from 1st March, 2001, the adjudicating authority could thereafter have initiated action for breach thereof by issuance of show cause notice and/or could have continued with the proceedings initiated but not concluded prior thereto? Whether any obligation or liability incurred under Section 3A of the Act is saved by Section 6 of the General Clauses Act and whether after the omission of Section 3A of the Act with effect from 11th May, 2001 proceedings in .....

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rks Ltd, reported in 2000 (119) E.L.T. 257 (S.C.) concluded that no proceedings could have been initiate under the omitted Rule 96ZQ after omission of Section 3A w.e.f . 11-5-2001/in absence of any saving clause. The Court further held that all proceedings which were pending as on 11-5-2001, even if initiated prior to omission of Rule 96ZQ would thereafter automatically lapse and no order could be passed if they were not concluded at the time of omission of Section 3A w.e.f . 11-5-2001. In this .....

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