2019 (7) TMI 1805 - AT - Central Excise

Tribunal Overturns Order Denying Abatement Claim, Emphasizes Compliance with Central Excise Rules

The Tribunal set aside the order rejecting the appellant's abatement claim under Central Excise Rules, finding it legally unsustainable. The appellant's ... Rejection of Abatement claim - manufacture of Ingots - Compound Levy Scheme - denial of abatement on the ground that conditions prescribed under Rule 96ZO(2) of Central Excise Rules, 1944 were not fulfilled - scope of SCN - HELD THAT:- The impugned order has been passed denying the abatement stating that the duty abatement was restricted under Rule 96ZO(3) of the Central Excise Rules which was never the allegation in the show cause notice and therefore, by relying upon the decision of the Hon’ble Apex Court in the case of CCE VERSUS SHITAL INTERNATIONAL [2010 (10) TMI 19 - SUPREME COURT] it is held that the impugned order is bad as the same has been passed beyond the scope of show cause notice. Further, the appellant has proved that they are eligible for abatement under Section 3A(3) of the Central Excise Act, 1944 read with Rule 96ZO(3) of Central Excise Rules, 1944. The amendment in Rule 96ZO(3) of Central Excise Rules, 1944. Further, the restriction under sub-section (3) of Section 3A has been removed w.e.f. 01.09.1997 vide Notification No. 44/97-CE dt.30.08.1997 and the disputed period in this case is from 14.11.1998 to 14.12.1998 and therefore, the restriction under Rule 96ZO(3) is not applicable and therefore, the appellants are eligible for abatement under Section 3A(3) of the Central Excise Act, 1944. In the present case, the intimation was given in time which was the requirement of the Rule. The alleged delay was only due to days being Saturday and Sunday, which is justified reason - appeal allowed - decided in favor of appellant. Issues:Appeal against rejection of abatement claim under Central Excise Rules.Analysis:1. The appellant challenged the order rejecting their abatement claim under Rule 96ZO(2) & (3) of Central Excise Rules, 1944, and Section 3A of Central Excise Act, 1944. The dispute arose when the Commissioner denied the abatement of Rs. 9,00,000 claimed by the appellant for the period when they suspended manufacturing activity. The appellant contended that they fulfilled the conditions for abatement as per the Rules, while the department disagreed, leading to a show cause notice and subsequent appeal to the Tribunal.2. The appellant argued that the impugned order was unsustainable as it went beyond the show cause notice and introduced new grounds for denying the abatement. Citing legal precedents, the appellant emphasized that any order beyond the scope of the show cause notice is not legally tenable. They further highlighted the provisions of Section 3A(3) & (4) of the Central Excise Act, 1944, and Rule 96ZO(3) of the Central Excise Rules, 1944, to support their claim for abatement.3. The appellant contended that the restriction under Rule 96ZO(3) was not applicable during the disputed period, as it was removed w.e.f. 01.09.1997. They argued that the impugned order misconstrued the provisions of Section 3A(3) and (4), and that they were rightly eligible for the abatement. Legal authorities and circulars were cited to bolster their argument regarding the eligibility for abatement under the relevant provisions.4. In contrast, the department defended the impugned order. However, the Tribunal found that the order exceeded the scope of the show cause notice and upheld the appellant's contention that they were eligible for abatement under Section 3A(3) of the Central Excise Act, 1944, read with Rule 96ZO(3) of Central Excise Rules, 1944. The Tribunal also noted the removal of the restriction under sub-section (3) of Section 3A from 01.09.1997, making the appellant eligible for abatement during the disputed period. The Tribunal concluded that the impugned order was not legally sustainable and set it aside, allowing the appeal of the appellant with consequential relief.This detailed analysis of the judgment highlights the legal arguments, statutory provisions, and precedents relied upon by both parties, leading to the Tribunal's decision in favor of the appellant regarding the abatement claim under the Central Excise Rules.