TaxTMI 
TaxTMI 
2024 (5) TMI 7
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.... under Section 3A of the Central Excise Act read with Rule 96ZO(3) of the Central Excise Rules, 1944". 4. Vide Finance Act, 1997, the Parliament introduced Section 3A of the Act. It reads as below : "Section 3A. Power of Central Government to charge Excise duty on the basis of capacity of production in respect of notified goods.-(1) Notwithstanding anything contained in section 3, where the Central Government, having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of duty in regard to such goods or such other factors as may be relevant, is of the 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, provide for determination of the annual capacity of production, or such factor or factors relevant to the annual capacity of production of the factory in which such goods are produced, by the ....
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....h any notification for the time being in force. Explanation 2. - For the purposes of this section the expressions "free trade zone" and "hundred per cent export-oriented undertaking" shall have the meanings assigned to them in section 3.]" 5. Undoubtedly, the Central Government introduced Rule 96ZO(3) of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules') by Notification No. 44/97, dated 30.8.1997 w.e.f. 1.9.997. For ready reference, the said rule reads as below : "[(3) Notwithstanding anything contained elsewhere in these rules, if a manufacturer having a total furnace capacity of 3 metric tonnes installed in his factory so desires, he may, from the first day of September, 1997 to the 31st day of March, 1998 or any other financial year, as the case may be, pay a sum of rupees five lakhs per month in two equal instalments, the first instalment latest by the 15th day of each month, and the second instalment latest by the last day of each month, and the amounts so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st day of September, 1997 to the 31st day of March, 1998, or any other financial year, as t....
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....ard till June, 1998. For the first time, on 15.6.1998, the applicant wrote to the jurisdictional authority expressing its intent to pay duty on actual production basis. At the same time, it is admitted to the applicant that it paid duty in terms of Rule 96ZO(3) of the Rules for the month of April, 1998. 10. In such facts, Shri Mathur would contend that the option to pay excise duty on compounded basis had to be exercised for every financial year. Merely because the applicant had made that application for the part of the Financial Year 1997-98, that option exercised could not be applied against the applicant's wishes for the Financial Year 1998-1999. In absence of any declaration made by the applicant for the next Financial Year 1998-1999, and in absence of any option exercised in that regard, the conclusion drawn by the revenue authorities as confirmed by the Tribunal, is wholly unfounded. The optional procedure to levy excise duty could not be extended beyond the option exercised by the applicant. 11. On the other hand, learned counsel for the revenue would submit, option once exercised in a financial year could not be withdrawn. Thus, in the first place, the option exercise....
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....mmissioner of C. Ex. & Customs Vs. Venus Castings (P) Ltd., 2000 (117) E.L.T. 273 (S.C.), it was observed as below : "10. The schemes contained in Section 3-A(4) of the Act and Rule 96-ZO(3) or Rule 96-ZP(3) of the Excise Rules are two alternative procedures to be adopted at the option of the assessee. Thus the two procedures do not clash with each other. If the assessee opts for the procedure under Rule 96-ZO(1) he may opt out of the procedure under Rule 96-ZO(3) for a subsequent period and seek the determination of the annual capacity of production. An assessee cannot have a hybrid procedure of combining (sic) the procedure under Rule 96-ZO(1) to which Section 3-A(4) of the Act is attracted. The claim by the respondents is a hybrid procedure of taking advantage of the payment of lump sum on the basis of the total furnace capacity and not on the basis of the actual capacity of production. Such a procedure cannot be adopted at all, for the two procedures are alternative schemes of payment of tax. 11. The learned counsel for the respondent contended that Rule 96-ZO(3) is contrary to Section 3-A(4) of the Act and, therefore, should be held to be ultra vires or the relevant rules ....
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.... Writ Petition No. 1127 of 1999 Jalan Castings (P) Ltd. v. CCE [ CMWP No. 1127 of 1999 (All)] disposed of on 28-2-2000 is reasonable and correct. We overrule the view taken by the Allahabad High Court in Pravesh Castings (P) Ltd. v. CCE [(2000) 36 RLT 239 (All)] . 12. On the reasoning adopted by us and bearing in mind that in taxation measures composition schemes are not unknown and when such scheme is availed of by the assessee it is not at all permissible for him to turn around and ask for regular assessment, we think, there is no substance in the contention urged on behalf of the respondents." 15. That view was further followed in Supreme Steels and General Mills (supra). Therefore, there is no room to entertain a doubt that option to pay Central Excise duty on compounded basis once exercised for the financial year may not be withdrawn by an assessee/manufacturer during that Financial Year. 16. What survives for our consideration is, whether the present applicant had withdrawn its offer at the beginning of the Financial Year 1998-99. As noted above, there is no written communication made by the applicant in that regard. The first communication that the applicant wrote to the....