2018 (8) TMI 1382 - AT - Central Excise

Tribunal Upholds Rejection of Abatement, Affirms Authority's Decision

The Tribunal upheld the rejection of abatement under Rule 96ZP(2) due to the appellant's choice of lump sum duty payment under Rule 96ZP(3), following ... Abatement for period of closure under Rule 96ZP(2) - option to discharge duty under Rule 96ZP(3) (lump sum/one twelfth payment scheme) - incompatibility of Rule 96ZP(3) election with proviso to sub section (3) and sub section (4) of Section 3A - binding effect of three member Bench precedent in absence of a stayAbatement for period of closure under Rule 96ZP(2) - option to discharge duty under Rule 96ZP(3) (lump sum/one twelfth payment scheme) - binding effect of three member Bench precedent in absence of a stay - Whether abatement under Rule 96ZP(2) is admissible to a manufacturer who has elected to pay duty under Rule 96ZP(3) for the relevant period May, 1998 to March, 2001. - HELD THAT: - The Tribunal applied the binding ratio of the three member Bench of the Supreme Court (as interpreted by the Bombay High Court in Rajuri Steels) that a manufacturer who elects the payment procedure under Rule 96ZP(3) - thereby obtaining the benefit of a prescribed monthly/one twelfth payment at a lower rate - is not entitled to remission or abatement for periods of stoppage under Rule 96ZP(2). The court explained that the proviso relied upon for adjustment of annual production capacity serves the purpose of proper fixation of capacity and does not permit availing both the lower rate/payment scheme and abatement for closure; accordingly the proviso to sub section (3) and sub section (4) of Section 3A cannot be invoked to secure abatement where Rule 96ZP(3) has been availed. The Tribunal further noted that no stay had been shown in respect of the earlier three member Bench decision and, in the absence of any such stay, that precedent is binding and must be followed. [Paras 3, 6]The abatement claimed under Rule 96ZP(2) for periods of factory closure is not admissible where the assessee has exercised the option to pay duty under Rule 96ZP(3); the adjudicating authority's order is confirmed and the appeal is dismissed.Final Conclusion: Appeal dismissed; the Tribunal confirms that electing the payment scheme under Rule 96ZP(3) precludes claim of abatement under Rule 96ZP(2) for the period May, 1998 to March, 2001, and the existing three member Bench precedent must be followed in absence of a stay. Issues:- Appeal against Order-in-Original No. NSK/CGST-CS/002/CPM/13/2017-18 dated 29.12.2017- Claim of abatement under Rule 96ZP(2) rejected due to exercise of lump sum duty option under Rule 96ZP(3)- Reference to Supreme Court case of Bhuwalka Steel Industries Ltd.- Interpretation of Rule 96ZP(3) and Rule 96ZP(2)- Precedents set by Supreme Court and High CourtsAnalysis:1. The appeal was filed against Order-in-Original No. NSK/CGST-CS/002/CPM/13/2017-18 dated 29.12.2017, passed by the Commissioner of CGST & Central Excise, Nasik. The appellant, engaged in manufacturing re-rolling products, claimed abatement under Rule 96ZP(2) for a period when the factory was closed, but it was rejected due to opting for lump sum duty payment under Rule 96ZP(3).2. The appellant argued that a recent reference by a two-member Bench of the Supreme Court in the case of Bhuwalka Steel Industries Ltd. necessitated the matter to be kept in abeyance. However, the absence of a stay from the Supreme Court on the earlier judgment against them meant that the precedent should be followed, as highlighted in the judgment of the Hon'ble Delhi High Court in another case.3. The Tribunal examined the submissions and noted that the appellant failed to show any stay on the judgment of a three-member Bench of the Supreme Court in a related case. Referring to the judgment of the Hon'ble Bombay High Court in Rajuri Steels Pvt. Ltd., it was established that once an assessee opts for duty payment under Rule 96ZP(3), abatement under Rule 96ZP(2) is not permissible. The Tribunal upheld this interpretation, citing specific clauses and provisions from the rules.4. The Tribunal emphasized that the proviso to sub-sections (2) and (3) of Rule 96ZP serves different purposes, with the latter governing the rate and manner of duty recovery. The judgment elucidated that the benefit of certain provisions is not available to manufacturers who opt for the payment scheme under Rule 96ZP(3), thereby disallowing abatement claims due to factory closures exceeding seven days.5. Based on the aforementioned legal analysis and precedents, the Tribunal concluded that the order of the adjudicating authority was valid, and subsequently dismissed the appellant's appeal. The decision was made in line with the established legal principles and interpretations of the relevant rules and court judgments.In summary, the Tribunal upheld the rejection of abatement under Rule 96ZP(2) due to the appellant's choice of lump sum duty payment under Rule 96ZP(3), following established legal interpretations and precedents from higher courts.