TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 680
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....king Machines (Capacity Determination and Collection of Duty) Rules, 2008, referred to as "2008 Rules" hereafter. These Rules expressly carry mention of Section 3A(2) & (3) in its preamble & are framed under it. 4. The contention of learned Senior Counsel is, said rule prescribing the manner of payment of duty and interest, envisages payment in advance i.e. even before goods are produced and hence it is inconsistent with or ultra vires the provisions of charging provision in Statute i.e. Section 3 of the Central Excise Act, 1944. He submits that, that section permits levy of excise only on goods actually manufactured or produced. Here, as levy is on goods not in existence i.e. still to be produced or to be manufactured, such levy char....
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....he opinion that it is necessary to safeguard the interest of revenue, specify, by notification in the Official Gazette, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section. (2) Where a notification is issued under sub-section (1), the Central Government may, by rules - (a) provide the manner for determination of the annual capacity of production of the factory, in which such goods are produced, by an officer not below the rank of Assistant Commissioner of Central Excise and such annual capacity of production shall be deemed to be the annual production of such goods by such factory; or (b)(i) specify the factor relevant to the pr....
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....cise duty on goods produced in such mills was rampant. The provision authorises the Central Government to notify certain goods, for the levy and collection of duty of excise on such goods, in accordance with the provision of the said section, having regard to the extent of evasion of duty as also other relevant factors. 6. The scheme evolved under this provision, envisages the determination of annual capacity of production of such factory by an officer not below the rank of the Assistant Commissioner of Central Excise in terms of the rules to be framed by the Central Government under sub-section (2) of Section 3A of the Act. The annual capacity of production of the factory is deemed to be the annual production of such goods by such fa....
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....ied & collected in such manner as may be prescribed". Whether Section 3 does or does not prohibit levy and collection in advance as goods to which the recovery relates are produced or manufactured in India or whether mere collection in advance disassociates levy with the process of production or manufacture, if ultimately it is co-related with actual production or manufacture, are not the issues germane before us as impugned Rules are framed not under S. 3 but under Section 3A. Section 3A has been added by amending Act 18 of 2008 & there is no challenge in any way or manner to the same in the present petition. Section 3A speaks of power of Central Government to charge excise duty on the basis of capacity of production in respect of notified....
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....f deemed capacity, re-determination of annual capacity or then abatement of the duty on proportionate basis, are all concepts introduced only because of need felt by the Legislature to determine in advance the annual capacity. Entire exercise undertaken by the Legislature reveals an anxiety to maintain link between the levy & the actual production or manufacture as far as possible & to balance it with need to achieve goals stipulated in sub-section (1) of S. 3A. This Section 3A therefore severs the so called nexus of levy, which is essential according to petitioner, with quantity actually produced and subjects "deemed annual production" to levy. Even Rule 5 of 2008 Rules is about the quantity deemed to be produced. Recovery of duty in advan....