TaxTMI 
TaxTMI 
2009 (5) TMI 278
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.... appellants had opted for payment of duty on lump sum basis in terms of Rule 96ZO(3) of the Central Excise Rules, 1944. The duty liability in that regard was worked out to be Rs. 60 lakh per annum of their 3MT furnace by the Commissioner of Central Excise, Chandigarh vide order dated 14-10-97. The appellants were accordingly required to discharge their duty liability on monthly basis in two equal instalments, the first instalment by 15th and second instalment by last working day of the month. 3. In Appeal No. 4242/2004 (hereinafter referred to as 'abatement appeal'), the proceedings came to be initiated pursuant to the abatement claim submitted by the appellants for the periods mentioned in their application. In the Appeal No. 2952/2004, (hereinafter referred to as "duty appeal"), the proceedings were initiated consequent to show cause notice issued under Section 11A of the Central Excise Act, 1944 for recovery of amount of duty for the period from September, 1997 to July, 1999 and interest thereon as well as penalty under Sections 11AB and 11AC respectively read with Rule 96ZO(3) of the said Rules. 4. In the abatement appeal, it is the case of the appellants that they had submit....
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.... on the ground that there was no case for exercising the extended period of limitation in the facts and circumstances of the case and therefore, the Revenue authorities erred in confirming the demand and hence, there was also no case for imposition of penalty. 8. Learned Advocate appearing for the appellants placed reliance in the decision of Apex Court in Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner reported in 1991 (55) E.L.T. 437 (S.C.); Union of India v. Wood Papers Ltd. reported in 1990 (47) E.L.T. 500 (S.C.); Union of India v. M/s. Krishna Processors delivered on 5-5-2009 in Civil Appeal No. 3397 of 2003 along with some other appeals and displayed on 2009 (237) E.L.T. 641 (S.C.) = 2009-TIOL-62-SC-CX, decisions of the Tribunal in Bata Steel Pvt. Ltd. v. CCE, Chandigarh reported in 2007 (219) E.L.T. 539 (Tri.-Del.); Mohinder Steels Ltd. v. CCE, Chandigarh reported in 2002 (145) E.L.T. 290 (Tri.-LB); and unreported decision of Punjab and Haryana High Court in the matter of CCE, Chandigarh v. M/s. Dhiman Steel Rolling Mills in Civil Appeal No. 123/2002 delivered on 8-1-2004, and submitted that the Revenue authorities while passing the impugned orders totally ign....
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....009 (235) E.L.T. 795 (HP)]; of the Tribunal in Mahanadi Casting Private Ltd. v. CCE, Bhubaneswar-I [2006 (206) E.L.T. 673 (Tri.- Kolkata)]; Kalaimagal Alloys Steel Pvt. Ltd. v. CCE, Coimbatore [2007 (219) E.L.T. 955 (Tri.-Chennai)]; CCE, Hyderabad v. Sheetal Shipping & Metal Processors Ltd. [2004 (175) E.L.T. 535 (Tri.-Bang.)]. He submitted that the appellant had opted for payment of duty in terms of Rule 96ZO(3) of the Central Excise Rules, 1944 and that the proceedings under the said provision of law are independent of the proceedings under other provisions of the said Act. The procedure to be followed in relation to the action to be taken for non-compliance of the said Rules is in terms of those Rules themselves and considering the same, the departmental authorities have clearly followed the said procedure and there is complete compliance of principles of natural justice. He further submitted that the appellants in spite of having afforded ample opportunity to place on record the materials in support of their contention, failed to come forward with any such material and therefore the authorities were left with no alternative than to decide the matter on the basis of whatever mat....
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....is of materials placed before the authority had made out a case of abatement claim for the period disclosed in their intimation letters, in terms of provision of law comprised under Rule 96ZO of the said Rules? (2) Whether the demand of duty was barred by law of limitation in terms of provision of law comprised under Section 11A of the said Act, bearing in mind the fact that appellant had opted for the scheme in terms of provisions of law comprised under Rule 96ZO of the said Rules? (3) Whether the appellant had established that there was no duty liability after 21-3-98 consequent to the alleged dis-possession? (4) Whether in the facts and circumstances of the case, the authorities are justified in imposing the penalty? 11. In Kedarnath Jute Mfg. case (supra), the Apex Court while dealing with the scope of Section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 held that when exemption available to an assessee from payment of duty provides for a condition that a person claiming exemption shall furnish a declaration form in the manner prescribed under the statutory provision, any deviation therefrom under the guise of the liberal construction is not permissible as the sa....
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....pecifically ruled that a dealer without filing a declaration in the prescribed form cannot be later allowed to prove his case by producing other evidence. 14. In Venus Castings case (supra), the Apex Court while dealing with the scheme under Rules 96ZO and 96ZP held that "Rules 96ZO and 96ZP provide for procedure to be followed by the manufacturer of ingots and billets and hot re-rolled products respectively. The scheme envisaged under these provisions is identical. These two Rules come into play after the Commissioner of Central Excise determines the annual capacity of the factory or mills manufacturing ingots or billets and hot re-rolled steel products under Section 3A of the Act read with the relevant annual capacity determination rules. Rules 96ZO and 96ZP proceed to lay down the manner of payment of duty, claim for abatement non-payment, payment of interest/penalty and such other incidental matters. Rule 96ZO classifies the manufacturers into two classes, those whose furnace capacity is 3 tonnes and other manufacturers with high capacity of furnaces. The rate of duty payable, except for period from 1-1-1997 to 31-3-1998 which was the transitional period, is Rs. 750/- per tonn....
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....of taking advantage of the payment of lump sum on the basis of total furnace capacity and not on the basis of actual capacity of production. Such a procedure cannot be adopted at all, for the two procedures are alternative schemes of payment of tax."           (Emphasis supplied) 16. The Apex Court also held that "the manufacturers, if they have availed of the procedure under Rule 96ZO(3) at their option, cannot claim the benefit of determination of production capacity under Section 3A(4) of the Act which is specifically excluded." 17. In Mangalore Chemical and Fertilisers Ltd. (supra), the Apex Court held that "There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve." 18. In Wood Paper Ltd. case (supra), the Apex Court held that "when the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exc....
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....batement claim on account of closure of the factory premises during the period specified under various intimation letters and the said claim was pending before the adjudicating authority. On the other hand, it is the contention of the Department that considering the mandatory nature of the provisions comprised under sub-rule (3) of Rule 96ZO, mere filing of such applications would not absolve the appellants from their responsibility to discharge liability under said provisions of law. The authorities below under the impugned order in relation to rejection of the abatement claim has held that the appellants had not complied with the conditions of sub-rule (2) of Rule 96ZO which deal with various requirements which are to be complied with for the purpose of availing abatement claim. It is also the contention on behalf of respondents that abatement claim cannot be entertained in view of the obligation of the manufacturer to clear the duty liability once the manufacturer has opted for payment of duty in terms of sub-rule (3) of Rule 96ZO. 22. The Rule 96ZO(2), as already seen above, deals with right of manufacturer to make abatement claim in the circumstances specified thereunder, sub....
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....so presented on 4th February itself. Again the letter of restarting of furnace dated 18th of February was also presented on 18th February, itself. Perusal of these letters therefore, would disclose that some of the letters intimating the closure and/or commencement of functioning of furnace were sent on the very date on which the furnace was shut down or had commenced functioning. But in some cases, it was submitted on a day or two later than the date or subsequent to the day it was written. 25. As already seen above, the abatement claim in terms of 96ZO(2), has to be subjected to fulfilment of the conditions enumerated thereunder. Condition specifically provides that intimation of closure has to be either prior to the date of closure or on the date of closure. Similarly the intimation regarding restarting of production should be either prior to the date of actual commencement of production or on the date of commencement of production. Apart from these requirements, there are two other requirements specified under the said sub-rule and they relate (1) to the closing balance of stock of ingots and the billets of non-alloy steel at a time of closure as well as at a time of recommenc....
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....tter dated 3rd February was submitted on 5th February. While the first letter speaks of closure from 7.10 hours, subsequent letter speaks of closure from 8 hours. 26. It is to be noted that requirement of intimation regarding the date and timing of the closure and recommencement of production is not an empty formality. It is with the specific purpose for proper check and control by the Revenue authorities to ensure proper supervision and to avoid evasion of payment of the duty in respect of production by the manufacturer. The requirement of timing and date along with closing and opening balance of stock would reveal that sufficient material is required to be placed at the disposal of the Revenue authorities in order to enable them to verify whether any clandestine production is in progress which may result in clandestine removal of the products by evading the duty thereon. The exact time regarding the commencement and closure and corresponding information regarding the availability of stock required for the utilisation of the manufacture of the product, all those information can help revenue authorities to ascertain the exact amount of production during the time factory is in oper....
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....d to be statutory. Such a condition must, will be equated with the requirement of production of the declaration form in Kedaranath's case and thus finds some consequences that would ensue for the non-compliance. Shri Narasimhamurthy says that there was no way out of this situation and no adjustment was permissible, whatever be the other remedies of the appellant. There is a fallacy in the emphasis of this argument. The consequence which Shri Narasimhamurthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve." (emphasis supplied) 29. Plain reading of the decision of the Apex Court in Managal....
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....tion in the factory of the appellants. 31. That apart, as rightly submitted by the learned SDR Apex Court in Venus Casting case has clearly held that manufacturers opting for composite scheme cannot have abatement claim. It has been further held that the manufacturers, availing procedure under Rule 96Z(3) at their option, cannot claim abatement of production capacity under Section 3A(4) of the said Act as the same is specifically excluded. Undoubtedly, the decision of the Commissioner has not been on the basis of law laid down by the Apex Court in Venus Casting case in this regard. However, that being the law laid down by the Apex Court, it is binding on the Courts and Tribunals in the country. Being so, apart from the fact that materials on record do not disclose compliance of sub-rule (2) of Rule 96ZO of the said Rules, even otherwise, in view of the fact that the appellant had opted for procedure under Rule 96ZO(3) at their option, the question of taking resort to sub-rule (2) and to make the abatement claim does not arise at all. 32. The first point for consideration is therefore, has to be answered in negative and against the appellants and is accordingly answered. 33. As r....
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....tion 11A of the Central Excise Act are applicable to the recovery of amounts due under the compounded levy scheme for hot re-rolling steel mills, while observing that Rule 96P contains detailed provisions regarding time and manner of payment and also contains provision relating to payment of interest and penalty in the event of delay in payment or non-payment of dues and that there is a comprehensive scheme thereunder which excludes general provisions of Central Excise Act and Rules and held that "Time limit prescribed for one scheme could be wholly inappropriate for another scheme and time limit under Section 11A has no exception. Therefore, in the light of judgment of Apex Court in the case of Venus Casting and Raghuvar (India) Ltd., we hold that recoveries of amounts under the compounded levy scheme for re-rollers is not covered by the general time limit prescribed under Section 11A of the Central Excise Act." 35. In Raghuvar (India) Ltd. case (supra), the Apex Court while considering the scope of Rule 57-I of the Central Excise Rules, 1944 had held that any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated....
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....8 reads thus: "Assistant Commissioner of Central Excise, Central Excise Division, Dandi Swami Chowk, Ludhiana. Sub: Intimation for close down of M/s. Mittal Alloys C/o Ishar Alloys (P) Ltd. Sir, This is to inform you that our unit has been forcefully closed down by Directors of Ishar Alloys (P) Ltd. w.e.f. 21-3-98 and since than there is no production in the unit. Even our accounts books and other Excise records which were lying in the factory premises at Mittal Alloys are in the custody of M/s. Ishar Alloys (P) Ltd. and kept by them under lock and key. As at present there is deadlock and there is no possibility of production to resume in rear future. We shall intimate you the progress as & when we arrive at some decision taking point. This is for your kind information and record. Thanks Yours faithfully For MITTAL ALLOYS Sd/- PARTNER Place : Ludhiana Dated : 21-3-98 C.C. The Superintendent Central Excise Range V, Ludhiana" 40. Plain reading of the letter quoted above would disclose that it does not anywhere deal with the issue of alleged dispossession of the appellants from the premises. The said letter refers to the closure of the premises. ....
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....e imposition of penalty to the tune of amount of duty demanded. It is the contention of the appellant that the facts on record do not disclose intention to evade the payment of duty but the circumstances which could not enable the appellant to continuously manufacture the product and therefore, it is not a fit case for levy of penalty. He also submitted that there were already applications filed for abatement claim and this aspect ought to have been considered while dealing with the aspect of penalty. On the other hand, the learned SDR submitted that there is no discretion left to the authorities in the matter for imposition of penalty and hence according to the learned SDR the imposition of penalty does not warrant interference in the facts of the case. Attention is also drawn in this regard to the decision of the Apex Court in Dharamendra Textile Processors case (supra). 45. In the matter in hand, records apparently disclose that the appellant had been pursuing the remedy under sub-rule (2) of Rule 96ZO i.e. abatement claim, that the appellants were not able to establish the claim is totally different thing. It has also been the case of the appellant right from the beginning tha....