TaxTMI 
TaxTMI 
2018 (11) TMI 742
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..... The Assessee by the communication dated 4 August 1997 opted to avail the specific duty liability under Rule 96ZO(3) of the Central Excise Rules, 1944. It had declared that the capacity of their induction furnace as 3.5MT. It had produced a Certificate to that effect. The Department accordingly extended the said benefit under Rule 96ZO(3) to the Assessee. Thereafter the Assessee by the communication dated 22 September 1998, opted out the provisions of Rule 96ZO(3). According to it, it was compelled to do as there were recurrent power cuts in the area. Since the Assessee did not pay the amount of Rs. 5,00,000/- as specified under Rule 96ZO(3) before the Assessee opted out, various Show Cause Notices were issued. They were in respect of August 1997, September 1997 to December 1997, January 1998 to May 1998, June 1998 to November 1998, December 1998 to May 1999, June 1999 to August 1999, September 1999 to January 2000, February 2000 to March 2000. These eight Show Cause Notices raised a total demand of Rs. 1,33,53,880/-. A demand of Rs. 23,61,950/-/- was confirmed and the demand of Rs. 1,02,91,661/- was dropped and penalty of Rs. 50,000/- under Rule 96ZO was imposed. The Revenue file....
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....ner of Central Excise and such annual capacity shall be deemed to be the annual production of such goods by such factory; or (b) (i) specify the factor relevant to the production of such goods and the quantity that is deemed to be produced by use of a unit of such factor; and (ii) provide for the determination of the annual capacity of production of the factory in which such goods are produced on the basis of such factor 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: Provided that where a factory producing notified goods is in operation during a part of the year only, the annual production thereof shall be calculated on proportionate basis of the annual capacity of production: Provided further that in a case where the factor relevant to the production is altered or modified at any time during the year, the annual production shall be re-determined on a proportionate basis having regard to such alteration or modification. (3) The duty of excise on notified goods shall be levied, at such rate, on the unit of production or, as the case m....
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....tenth of each month, pay a sum of rupees five lakhs and the amount so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st day of August, 1997 to the 31st day of March, 1998, or any other financial year, as the case may be, subject to the condition that the manufacturer shall not avail of the benefit, if any, under proviso to sub-section (3) or under sub-section (4) of the section 3A of the Central Excise Act, 1944 (1 of 1944); Provided that for the month of August, 1997 the Commissioner may allow a manufacturer to pay the sum of rupees five lakhs by the 31st day of August,1997: Provided further that if the capacity of the furnaces installed in a factory is more than or less than 3 metric tonnes, o there is any change in the total capacity, the manufacturer shall pay the amount, calculated pro rata: Provided also that where a manufacturer, falls to pay the whole of the amount payable for the month of August, 1997 by the 31st day of August, 1997 or for any other month by the tenth of each month, as the case may be, he shall be liable to pay the outstanding amount along with interest thereon at the rate of eighteen per cent per annu....
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....ring the relevant period, is not germane to the scheme of Rule 96ZO(3). The learned Standing Counsel relied upon the decisions of the Supreme Court in the case pay of Commissioner of Central Excise and Customs v/s. Venus Castings (P) Ltd.2000 Law Suit (SC) 671 and Union of India v/s. Supreme Steels and General Mills 2001 Law Suit (SC) 1369. The learned Standing Counsel submitted that the Tribunal has therefore committed an error in remanding the matter. 12. The learned Counsel for the Assessee submitted that the second proviso to Rule 96ZO(3) makes it clear that if there is any change in capacity, the Assessee can opt for a pro rata payment. It is contended that since there were several power cuts during the relevant period, there was a change in total capacity and the Assessee therefore paid the amount calculated pro rata and therefore there was no default. The leaned Counsel submitted that there is no error committed by the Tribunal in remanding the matter to the Commissioner as the Commissioner has not looked into the implications of second proviso to the Rule 96ZO (3). He submitted that Section 3A(2) also indicates that various factors relevant for annual capacity of producti....
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....ufacturing ingots or billets and hot re-rolled steel products under Section 3-A 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 tonne, at the time of clearance. Total amount of duty should be paid by the 31st March of relevant financial year, otherwise interest at the rate of 18 per cent per annum is payable and if the duty has not been paid by this date penalty is also payable which is equal to outstanding duty or Rs. Five thousand whichever is greater. Sub-rule (2) thereof provides that if no ingots and billets are produced for a continuous period of seven days, the manufacturer may claim abatement by following appropriate procedure. Sub-Rule 3 thereof envisages a composition method of payment of duty. Manufacturers of in....
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.... such manner and at such rate as may be prescribed by the Rules. Section 3A provides special procedure in respect of the power of the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. If such interpretation is not accepted, it is contended, that the levy of tax is in the nature of a license fee and not on production of goods at all. Schemes of composition are available in several other enactments including the Sales Tax Act and the Entertainment Tax [See : State of Kerala and Anr vs. Builders Association of India & Ors., 1997 (2) SCC 133]. In this context, the learned counsel for the respondents referred to several decisions. However, in our opinion, all these decisions either arising under the Income Tax Act in relation to special mode of collection of tax or excise duty on timber dealers or other enactments have no relevance. What can be seen is that the charge under the Section is clearly on production of the goods but the measure of tax is dependent on either actual production of goods or on some other basis. The incidence of tax is, therefore, on the production of goods. It cannot be said that collection of tax based....