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The Commissioner of Central Excise, O/o. the Commissioner of Central Excise, Customs & Service Tax Versus M/s. United Bleachers Ltd.

2018 (2) TMI 920 - MADRAS HIGH COURT

Delayed payment of central excise duty under Section 3A of the Central Excise Act, 1944 - Demand of Interest and penalty - Rules 96ZO, 96 ZP and 96 ZQ of the Central Excise Rules, 1994 - Annual Capacity of Production Scheme - respondent is independent processor of textile fabrics - Held that: - In Shree Bhagwati Steel Rolling Mills Vs. Commissioner of Central Excise, [2015 (11) TMI 1172 - SUPREME COURT], the Hon'ble Supreme Court has declared Rule 96 ZQ(5)(ii) of the Central Excise Rules, 1944, .....

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s by which the tribunal, dismissed the appeal filed by the revenue and remanded the matter for reconsideration, by the adjudicating authority. 2. Facts relating to the appeal are that M/s.United Bleachers, Nellithurai Road, Mettupalayam, respondent company, is an independent processor of textile fabrics. According to the company, duty liability has been discharged under the compounded levy scheme, prescribed under Section 3A of Central Excise Act, 1944, read with Rule 96 ZQ of Central Excise Rul .....

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3] he shall be liable to; i. Pay the outstanding amount of duty along with interest at the rate of 24% per annum calculated for the out-standing period on the outstanding amount and ii. A penalty equal to an amount of duty outstanding from him at the end of such month or rupees five thousand whichever is greater 3. The Commissioner of Central Excise, Coimbatore determined the duty liability of the respondent provisionally, under the determination of Annual Capacity of Production scheme [ACP], vi .....

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ge an amount of ₹ 6,25,000/- [50% of duty liability as per Rule 96ZQ[3] by 15th of calendar month], and balance amount of ₹ 6,25,000/- by the end of the month. 5. Meanwhile the respondent filed an appeal before CESTAT against the ACP order, and after conducting personal hearing a fresh ACP was fixed by the Commissioner of Central Excise, Salem, for the said period vide order, C.No.IV/16/47/2004 Cex.Pol. Dt.21.04.2004. [i] Claiming that the respondent failed to discharge the duty liab .....

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8.11.2000 01.03.2000 to 31.05.2000 18,00,000/- 6. [i]After due process of law, based on the original ACP fixed, the Commissioner of Central Excise, vide O-I-O Sl.No.35/2001 dated 19.09.2001 confirmed the demand of duty of ₹ 1,14,87,652/-, for the period from 16.12.1998 to 31.05.2000, under Rule 96ZQ[3], along with appropriate interest, under rule 96ZQ[5][i] and imposed penalty, under rule 96ZQ[5][ii]. Aggrieved by the order the respondent filed an appeal with CESTAT, Madras, [Appeal No.E/1 .....

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w, the Commissioner of Central Excise, Salem, vide O-I-O N.07/2005 dt.11.02.2005 [C.No.V/52/15/17/2004Cs.Adj], confirmed the demand of interest amounting to ₹ 60,432/- [under Rule 96ZQ[5][i] and Penalty amounting to ₹ 10,36,38,868/- under Rule 96ZQ[5][i], and penalty amounting to ₹ 10,36,38,868/- under Rule 96ZQ[5][ii] [Appeal No.E/308/2005] 7. CESTAT, Chennai, has passed a common order, in the appeals filed by the respondent, vide final order No.499 to 501/2006 dt. 12.06.2006, .....

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erved that since the company was declared sick, imposition of equal penalty, was harsh. CESTAT, Madras, further ordered that while imposing penalty, the extent of default for each month must be ascertained and penalty to be determined, on the facts and circumstances of the case. 8. As directed by the tribunal, the Commissioner of Central Excise, after giving opportunity to the respondent, passed a detailed order-in-original, imposing equal penalty amounting to ₹ 73,12,645/- after calculati .....

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, without going into the merits of this case, and without discussing the finding of the order-in-original, which has detailed the month wise quantification of duty liability and duty outstanding, worked out, to arrive at the penalty liability, is not legal and proper, and hence, instant appeal is filed under Section 35G of the Central Excise Act, 1944, on the following substantial questions of law. "1. Whether the impugned order of the Hon'ble Tribunal was legally correct in remanding t .....

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o substantiate the above substantial questions of law, Mr.A.P.Srinivas, learned senior standing counsel for Customs, Central Excise and Service Tax submitted that CESTAT, Madras, has passed the impugned order, disposing of a set of appeals by remanding the matter to the respective adjudicating authorities, giving directions as detailed below, (i) That the assessee should be given fair opportunity to argue on the facts and evidence borne by record. (ii) That the authority shall also follow the ra .....

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tigation. 11. Earlier, the Tribunal, in its final order NO.499 to 501/2006 dated 12.06.06, ordered de-nova adjudication, when the respondent appealed against the O-I-O Nos.35/2001 dt. 19.09.2001, 16/2004 dt. 21.04.2004 and 7/2005 dt. 11.02.2005. De-nova Adjudication order (No.2/2007 dt.26.02.2007) was passed by the Commissioner of Central Excise, as per the directions of the Tribunal. 12. Vide final order Nos.499 to 501 of 2006 dated 12.06.2006, while ordering, De-Nova Adjudication, the Tribunal .....

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alty liability alone be calculated, when the duty liability has already been arrived at. 13. Prior to issuing the O-I-O, dated 26.02.2007, as directed by Tribunal, the respondent was given reasonable opportunity. Personal hearings were fixed on 13.09.06, 26.09.06, 10.10.06, 07.11.06 and 28.11.06, but the respondent requested for postponement. Finally, the respondent appeared on 18.12.2006 and furnished detailed written submissions. Commissioner of Central Excise, Salem, the Adjudicating Authorit .....

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-nova adjudication, is not proper. 14. He further submitted that Sub-rule (5) of Rule 96 ZQ of the said rules, make it obligatory to pay interest, in case of delayed payment of duty, as well as to pay the penalty. The two sub-clauses of the said Rule 5 of Rule 96-ZQ would clearly disclose that, liability under the both the clauses, to pay penalty, were neither, alternative nor optional, nor it leaves any discretion, either to the authority or to the assessee. As regards penalty is concerned, pri .....

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ty. Amount of penalty has been specified, to be equal to the amount of duty, outstanding. He further submitted that in the case in hand, the penalty levied is equal to the amount of duty, outstanding or paid beyond the due date. Thus, considering the provisions of law, there is no case for interference with the O-I-O. 15. Learned counsel further submitted that since the Order-In-Original No.02/2007 dt. 26.02.2007 imposing the interest and penalty under -rule (5) of Rule 96 ZQ was passed, after f .....

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liability has already been upheld and that therefore, there is no need for redetermination of duty liability and further contended that in the case of the respondent, there was no consent for redetermination of duty, this Court, is not inclined to accept the said contentions, for the reason that final order Nos.40241 to 40263 of 2015 dated 24.02.2015 shows that in view of the judgment of the Hon'ble Apex Court in CCE, Chandigarh Vs. Doaba Steel Rolling Mills reported in 2011(269) ELT 298 and .....

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Nos. 40241 to 40263 of 2015, has passed final orders dated 24.02.2015, as hereunder "2. Ld. Counsels suggested that wherever there was violation of natural justice, no proper determination of Annual Capacity Production (ACP) was made, abatement not allowed and procedure prescribed by Rule 5 of Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 was not followed, such issues be relooked by concerned adjudicating authority, as a result of which both sides shall get reasonabl .....

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ues are involved. It is also stated in the Bar that Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 being under challenge before the Hon'ble High Court of Madras in W.A.No.1620/2003 by M/s.Madras Steel Re-Rollers Vs. UOI, the outcome of that judgment be also applied by learned adjudicating authority while they complete readjudication following principles of natural justice the discretion of the Tribunal made by this order. 3. Revenue agreed to aforesaid pre .....

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ty shall also follow the ratio laid down in the following judgments and the appellant shall have proper opportunity of hearing on the basis of the ratio laid down in these cases:- (a) Triveni Alloys Ltd. Vs. CESTAT, Chennai 2014 (206) ELT 61 (Mad.) (b) CCE, Chandigarh Vs. DOABA Steel Rolling Mills 2011 (269) ELT 298 (SC) (iii) wherever abatement is permissible, that shall be allowed by the authority concerned in accordance with law. (iv) Since appellants have grievance of violation of natural ju .....

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l Mills Annual Capacity Determination Rules, 1997 is under challenge before Hon'ble High Court of Madras in the writ application as aforesaid, th authority shall be guided by judgment of the Hon'ble High Court if judgment therein comes while doing readjudication. Otherwise, his decision shall be subject to outcome thereof. In such event, the authority shall mention in his order that the readjudication order is subject to outcome of the writ application above." 18. While doing so, ta .....

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on'ble High Court of Madras stating that writ application may be transmitted to the Apex Court. We are unable to express any opinion on such proposition in absence of any such memo before us." 19. On this day, attention of this Court was also invited to the order made in W.A.Nos.1620 & 1675 of 2003, dated 17.06.2015, by which a Hon'ble Division Bench of this Court in M/s.Madras Steel Re-Rollers Association, Chennai and another Vs. Union of India and another, dismissed the writ a .....

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