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Mahavar Steel & Alloys Trading (Private) Ltd. Versus Union of India & Ors.

2016 (7) TMI 724 - RAJASTHAN HIGH COURT

Production capacity based duty - Sec.3A of the Central Excise Act, 1944 - Held that:- R.5 of the Rules,1997 is neither in violation of Art.14 of the Constitution of India nor ultra vires to Sec.3A of the Act,1944. The parties will abide by the final outcome of the pending proceedings before the Apex Court and the petitioner, apart from validity of R.5 of the Rules,1997 which we too have held to be intra vires to Art.14 of of the Constitution of India, will be at liberty to contest the other issu .....

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n prayed that it is in contravention of Sec.3A of the Central Excise Act, 1944 ( Act,1944 ), at the same time prayer has also been made for quashing & setting aside the order dt.20-7-1999 passed by Commissioner, Central Excise, Jaipur & so also further notice issued from the office of Deputy Commissioner, Central Excise Division, Jaipur dt.20/23-8-1999 in consequence to the decision impugned dt.20-7-1999. As regards validity of R.5 of the Rules,1997 is concerned, the Division Bench of Ka .....

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upreme Court and having regard to the object of Section 3A, we are of the opinion, that Rule 5 cannot be stated to be violative of Article 14 or ultra vires Section 3A. In other words, the differentia or classification, as alleged, have a rational nexus with the object to be achieved by the law. To test this view, we would like to once again refer to the example given by the learned senior counsel for the appellant to emphasis that Rule 5 is discriminatory. Class A manufacturer to whom, accordin .....

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situation which seems odd such as the one brought to our notice on the basis of the example. Class A manufacturer irrespective of the figures of production for the year 1996-97, 1997-98 and for subsequent years can approach the Commissioner under Sub-section (4) of Section 3A and produce evidence in support of his claim in respect of the actual production if it was lower than the production determined under sub-section(2) of Section 3A. In other words, apart from the mechanism provided in the pr .....

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n (3). Further, Sub-section(5) provides refund of duty paid in excess if the Commissioner finds on the basis of the evidence produced by the assessee in support of his claim taking that actual production was lower than the production determined under Subsection( 2) of the Act. 26. If we look at Rule 5 from another angle, we are further satisfied about the view taken by us. Rule provides that if the production during the year 1996-97 was more than the production determined by the formula in Sub-r .....

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r, if class 'A' manufacturer in 1996-97 could produce 150 bars/rods there was no reason for him to produce less number of bars/rods in 1997-98 unless there is a reason and the evidence in support thereof and if there is any such reason or evidence the manufacturer can take recourse to sub-section (4) of Section 3A of the Act. It was also to check mischief, if any, on the part of manufacturer to show or go to lower/less production to gain an advantage of the scheme. We find that the class .....

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through the judgment of the High Court of Karnataka at Bangalore (supra) we are in conformity with the view expressed that R.5 is neither in violation of Art.14 of the Constitution nor ultra vires to Sec.3A of the Act,1944. It is informed to this Court that as regards further notice served upon the petitioner dt.20/23-8-1999 in consequence to the order of the Commissioner, Central Excise, Jaipur dt.20-7-1999, appeal has been preferred before the CESTAT. It is also brought to our notice that agai .....

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