TMI Blog2024 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, it had not agreed to be retained under the benefit of the compounding scheme. As to the mode in which the applicant may ever have applied to discontinue the benefit of the compounding scheme, Rule 96ZO(3) of the Rules leaves no doubt that a declaration was required to be filled by the applicant to be admitted to the benefit of the compounding scheme. It must have been filled at the relevant time i.e. August, 1998, in terms of the said provision. Clearly, the applicant was not required to submit the same on year to year basis. Once the scheme has been interpreted by the Supreme Court, it is mandatory that option once exercised for a financial year, may not be withdrawn midway. The only recourse that applicant may have taken may be to apply to the jurisdictional authority to discontinue the benefit of the compounding scheme from the beginning of the next Financial Year i.e. 1.4.1998. For such option to be exercised, the applicant ought to have made that application before the date i.e. 1.4.1998, and in any case before making the deposit of the compounding fee for the month of April, 1998. Having done otherwise, the applicant lost the opportunity to withdraw from the compounding sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducing 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 fulfills 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 subsection (3). (5) Where the Commissioner of Central Excise determines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t if the capacity of the furnaces installed in a factory is more than or less than 3 metric tonnes, or there is any change in the total capacity, the manufacturer shall pay the amount, calculated pro rata: 6. Thereafter, w.e.f. 1.5.1998, second proviso to the above provision was substituted. It reads as below : [Provided also that where a manufacturer fails to pay the whole of the amount payable for any month by the 15th day or the last day of such month, as the case may be, he shall be liable to, - (i) pay the outstanding amount of duty along with interest thereon at the rate of eighteen per cent. per annum, calculated for the period from the 16th day of such month or the 1st day of next month, as the case may be, till the date of actual payment of the outstanding amount; and (ii) a penalty equal to such outstanding amount of duty or five thousand rupees, whichever is greater.] 7. Also, 3rd proviso was added to that provision. It reads as below : [Provided that if the manufacturer fails to pay the total amount of the duty payable for each of the months from September, 1997 to March, 1998 by the 30th day of April, 1998, he shall also be liable to pay a penalty equal to the outstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the compounding scheme under Rule 96ZO(3) of the Rules, the applicant continued under the said scheme in terms of the declaration made under Rule 96ZO(3) of the Rules. Further, it has been contended, the applicant treated itself to be under the benefit of the compounding scheme. It having deposited the compounding fee for the month of April, 1998, the applicant clearly indicated to the revenue authorities to remain under the said scheme for the Financial Year 1998-99 as well. Having thus indicated to the revenue authorities its intent to remain under the compounding scheme and having paid the compounding duty for the month of April, 1998, it never became open to the applicant to withdraw from that scheme in the middle of the financial year. The application moved by the applicant to be charged to duty on actual production basis, on 15.6.1998, was rightly rejected in terms of Rule 96ZO(3) of the Rules. He has placed reliance on a decision of the Supreme Court in Union of India Vs. Supreme Steels and General Mills, 2001 (133) E.L.T. 513 (S.C.) . 12. Having heard learned counsel for the parties and having perused the record, in the first place, it has to be recognised that normall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch rate as may be prescribed by the Rules. Section 3-A provides a special procedure in respect of the power of the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. If such interpretation is not accepted, it is contended, that the levy of tax is in the nature of a licence fee and not on the production of goods at all. Schemes of composition are available in several other enactments including the Sales Tax Act and the Entertainment Tax. (See State of Kerala v. Builders Assn. of India [(1997) 2 SCC 183] .) In this context, the learned counsel for the respondents referred to several decisions. However, in our opinion, all these decisions either arising under the Income Tax Act in relation to special mode of collection of tax or excise duty on timber dealers or other enactments have no relevance. What can be seen is that the charge under the section is clearly on production of goods but the measure of tax is dependent on either actual production of goods or on some other basis. The incidence of tax is, therefore, on the production of goods. It cannot be said that collection of tax based on the annual furnace capacity is not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded basis. Having done that, the applicant had clearly indicated to the revenue authorities its intent to remain under the benefit of the compounding scheme for the Financial Year 1998-99. It is self-contradicted contention being advanced that though the applicant had paid up the compounding fee for the month of April, 1998, it had not agreed to be retained under the benefit of the compounding scheme. 17. As to the mode in which the applicant may ever have applied to discontinue the benefit of the compounding scheme, Rule 96ZO(3) of the Rules leaves no doubt that a declaration was required to be filled by the applicant to be admitted to the benefit of the compounding scheme. It must have been filled at the relevant time i.e. August, 1998, in terms of the said provision. Clearly, the applicant was not required to submit the same on year to year basis. Once the scheme has been interpreted by the Supreme Court, it is mandatory that option once exercised for a financial year, may not be withdrawn midway. The only recourse that applicant may have taken may be to apply to the jurisdictional authority to discontinue the benefit of the compounding scheme from the beginning of the next Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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