TMI Blog2019 (1) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... ercising a facility given under Section 3A. It is found that in case the appellants have not opted for Rule 96ZP, they are governed by Section 3A(4) and the authorities are bound to examine their claim of closure of the factory and to give abatement of the duty - There is nothing shown on record that the appellant’s request was considered by the Revenue and an order has been passed after giving a due opportunity to the appellants. Therefore, there is no merit in the order passed by Commissioner (A) - the contentions of the appellant is correct that they are liable to pay duty for the period of 58 days and accordingly, the balance duty of ₹ 1,23,990/- is confirmed - penalty set aside - appeal allowed - decided in favor of appellant. - E/582/2003-DB - Final Order No. 20047/2019 - Dated:- 14-1-2019 - SHRI S.S GARG, JUDICIAL MEMBER And SHRI P. ANJANI KUMAR, TECHNICAL MEMBER Mr. M. Karthikeyan, Advocate For the Appellant Mr. Gopa Kumar, AR For the Respondent ORDER Per: P. ANJANI KUMAR, Briefly stated the facts of the case are that M/s. Sainath Steels, the appellants are manufacturers of hot re-rolled products of steel falling under Chapter 72 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case in a proper perspective and confirmed the demand based on the findings given by the lower authority. The Ld. Commissioner (A) failed to take note of the fact that they have never opted for procedure under Rule 96ZP(3) and that the Commissioner of Central Excise, Belgaum had fixed the annual capacity of the appellant under subsection (2) of Section 3A and under the provisions of sub-rule (3) read with Rule 5 of Rerolling Mills (Annual Determination of Capacity) Rules, 1997. He further submitted that the Ld. Commissioner (A) failed to note that the Section 3A of the Act provides for calculation of duty when the factory is not in operation fully. The duty payable by them is only for the period of 58 days and not for the entire period of 9/1997 to 3/1998. They relied upon: (i) Chamundi Steels Castings Pvt. Ltd.: 2000 (40) RLT 483 (ii) CCE, Hyderabad-I vs. Handum Iron Steel Enterprises Ltd.: 2008 (221) ELT 552 (Tri.-Bang.) (iii) CCE, Hyderabad-III vs. Kinnera Steels Ltd.: 2015 (321) ELT 196 (AP) (iv) Bhuwalka Steel Industries Ltd. vs. UOI: 2017 (348) ELT 393 (SC) (v) 2015-TIOL-283-SC-CX 3. The learned AR for the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by such factory : Provided that where a factory producing notified goods is in operation only during a part of the year, the production thereof shall be calculated on proportionate basis of the annual capacity of production. (3) The duty of excise on notified goods shall be levied, at such rate as the Central Government may by notification in the Official Gazette specify, and collected in such manner as may be prescribed : Provided that, where a factory producing notified goods did not produce the notified goods during any continuous period of not less than seven days, duty calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed. (4) Where an assessee claims that the actual production of notified goods in his factory is lower than the production determined under sub-section (2), the Commissioner of Central Excise shall, after giving an opportunity to the assessee to produce evidence in support of his claim, determine the actual production and redetermine the amount of duty payable by the assessee with reference to such actual production at the rate specified in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998, as determined under sub-rule (3) of rule 3 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997. This amount shall be paid by 31st day of March, 1998; (b) the amount of duty already paid, together with on-account amount paid by the manufacturer, if any, during the period from 1st day of August, 1997 to the 31st day of March, 1998, shall be adjusted towards the total amount of duty liability payable under clause (a); (c) if a manufacturer fails to pay the total amount of duty payable under clause (a) by the 31st day of March, 1998, he shall be liable to pay the outstanding amount along with interest at the rate of eighteen per cent. per annum on the outstanding amount, calculated for the period from the 1st day of April, 1998 till the date of actual payment of the whole of the outstanding amount. II. Total amount of duty liability for a financial year subsequent to 1997-98 (a) a manufacturer shall pay a total amount calculated at the rate of ₹ 400/- per metric tonne on capacity of production of his factory as determined under sub-rule (3) of rule 3 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997. This amount shall be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continuous period starting from ________ hours on __________ (date) to ___________ hours on ________(date). (3) Notwithstanding anything contained elsewhere in these rules, a manufacturer may, in the beginning of each month from 1st day of August, 1997 to the 31st day of March, 1998 or any other financial year, as the case may be, and latest by the tenth of each month, pay a sum equivalent to one-twelfth of the amount calculated at the rate of ₹ 300/- multiplied by the annual capacity in metric tonnes, as determined under sub-rule (3) of rule 3 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997, and the amount so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st day of August, 1997 to the 31st day of March, 1998, or any other financial year, as the case may be, subject to the condition that the manufacturer shall not avail of the benefit, if any, under the proviso to sub-section (3) or under sub-section (4) of the section 3A of the Central Excise Act, 1944 (1 of 1944) : Provided that in respect of the non-alloy steel hot re-rolled products, manufactured or produced by a re-rolling mill in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. We find that there is a provision under Section 3A(4) for redetermination of amount of duty where the assessee claims that the actual production of notified goods in his factory is lower than the production determined under sub-section (2). We find that Hon ble Supreme Court has observed in the case of Bhuwalka Steels Industries (supra) in paragraph 40-46 has held as under: 40. But the benefit of Section 3A(4) i.e. the right to rebut the presumption regarding the annual production is denied to a sub-class of manufacturers falling under Rule 96ZP(3)) who are also a part of a larger class falling under the Scheme of Rule 96ZP of the Central Excise Rules, 1944. 41. But for the declaration of sub-rule (3) of Rule 96ZP, an assessee whose ACP is determined in accordance with the Rule 3 of the Rules of 1997 would be entitled under sub-section (4) of Section 3A of the Act, to seek the determination of his actual production and the tax liability thereon. 42. The determination of the ACP is a one-time affair. It appears from the factors indicated in the Rule 3 that the ACP would remain unaltered so long as there is no change in the machinery employed and the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oosing at a given point of time to make payment of duty on monthly basis calculated in terms of sub-rule (3) but a few months later (for that matter even a month later), for various legitimate reasons, production may fall considerably below the ACP (of the assessees factory). It is possible, in some cases there can be total cessation of the manufacturing activity for reasons beyond the control of the assessee. If the option exercised by an assessee under Rule 96ZP(3) is held to be good for eternity it would not only lead to illogical consequences but also to an unconstitutional collection of taxes without there being a taxable event. We do not see anything in Rule which prevents the assessee from opting out of the Scheme of Rule 96ZP(3). We find that the Hon ble Supreme Court has laid emphasis on the fact that the conditions of Rule 96ZP are not eternal. If the appellant has to pay duty even when there was no production in the factory, it leads to illogical conclusions. The provisions of Rule 96ZP do not take away the right of the assessee from exercising a facility given under Section 3A. We also find that this Bench in the case of Handum Iron Steels Enterprises Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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