2021 (5) TMI 316 - AT - Central Excise

Tribunal remands case on duty demand pending Supreme Court decision, sets aside interest liability.

The tribunal remanded the case to the adjudicating authority for the issue of demand of duty pending the Supreme Court's decision on the validity of Rule ... Determination of Annual Production Capacity under Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 - Validity and operation of Rule 5 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 - Remand for decision after disposal of pending Civil Appeal - Levy of interest on excise duty liability where statutory scheme does not provide for interestDetermination of Annual Production Capacity under Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 - Validity and operation of Rule 5 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 - Remand for decision after disposal of pending Civil Appeal - Determination of APC and consequential demand of duty remanded for fresh consideration after the Supreme Court decides Civil Appeal No. 7823/2014 - HELD THAT: - The tribunal noted that Rule 5 of the 1997 Rules provides that where the formulaic annual capacity is less than actual production in financial year 1996-97, the annual capacity shall be deemed to equal the 1996-97 production. Because the vires and operation of Rule 5 are pending before the Hon'ble Supreme Court in Civil Appeal No. 7823/2014, the tribunal concluded that the question of fixation of APC and the resulting demand of duty should not be finally adjudicated at this stage. In the interest of justice the matter relating to determination of APC and the demand of duty is therefore remanded to the adjudicating authority for decision after the Supreme Court renders its judgment in the said appeal. [Paras 4]Issue of APC determination and consequential duty demand remanded to the adjudicating authority for decision after disposal of Civil Appeal No. 7823/2014.Levy of interest on excise duty liability where statutory scheme does not provide for interest - Liability to pay interest on the duty demand set aside - HELD THAT: - Relying on the Supreme Court's reasoning in Shree Bhagwati Steel Rolling Mills, the tribunal held that interest cannot be levied under the specified Central Excise Rules when the statutory provision under which the compounded levy scheme was introduced (section 3A) does not stipulate levy of interest. Applying that principle, the tribunal found the imposition of interest by the adjudicating authority to be unsustainable and quashed the interest liability. [Paras 5, 6]Liability to pay interest is set aside and the appeal is partly allowed on this ground.Final Conclusion: The appeal is partly allowed: the issue of fixation of Annual Production Capacity and the consequential duty demand is remanded to the adjudicating authority for fresh decision after the Hon'ble Supreme Court decides Civil Appeal No. 7823/2014, while the demand of interest is quashed and set aside. Issues:1. Entitlement to reduced annual production capacity based on parameter reduction.2. Validity of Rule 5 of Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997.3. Demand of duty and interest liability.Analysis:Issue 1:The main issue in this case is whether the appellant is entitled to a reduced annual production capacity based on the reduction of parameters in their mills. The appellant argued that the APC should have been fixed considering the changed parameters as directed by the tribunal in previous rounds of appeal. The consultant for the appellant cited various judgments to support their claim. On the other hand, the revenue representative reiterated the findings of the impugned order. The tribunal carefully considered both submissions and found that the lower authority had solely relied on Rule 5 for the decision.Issue 2:The validity of Rule 5 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 was also a significant issue in this case. The consultant for the appellant pointed out that the vires of Rule 5 were pending before the Honorable Supreme Court in Civil Appeal No. 7823/2014. Due to this pending challenge, the tribunal decided that the determination of APC and demand of duty should await the Supreme Court's judgment. The matter was remanded to the adjudicating authority solely for the issue of demand of duty.Issue 3:Regarding the demand of interest on the duty liability, the tribunal referred to a judgment by the Honorable Supreme Court in the case of Shree Bhagwati Steel Rolling Mills. The Supreme Court had ruled that the levy of interest cannot be made under certain Central Excise Rules as the Central Excise Act itself does not stipulate the levy of interest under the compounded levy scheme. Consequently, the tribunal set aside the liability of interest and partially allowed the appeal.In conclusion, the tribunal remanded the case to the adjudicating authority for the issue of demand of duty pending the Supreme Court's decision on the validity of Rule 5. The tribunal also set aside the liability of interest based on the Supreme Court's ruling. The judgment was pronounced on 28.4.2021.