TaxTMI 
TaxTMI 
2003 (5) TMI 69
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.... producing non-alloy steel ingots and billets from two induction furnaces at Lakhisarai, known as Unit No. I and Unit No. II having the production capacity of 3 M.T. and 4 M.T., respectively. 3. Under Section 3 of the Act, the duty is levied on all excisable goods mentioned in the Schedule provided they are produced or manufactured. The Central Government enacted Section 3A of the Act w.e.f. 14-5-1997 by Section 81 of the Finance Act, 1997 (26 of 1997), by which the system of levy of the Central excise duty on non-alloy induction furnaces has been changed. According to the said provision, duty is levied on the basis of the annul production capacity as determined under the aforesaid provision. It is further provided therein that where a factory did not produce the notified goods during any period of not less than seven days then the duty calculated on proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils the conditions as may be prescribed. 4. Unit No. 1 of the petitioner was closed for 59 days from 4th October, 1997 to 18th February, 1998, and Unit No. 2 was closed for 88 days from 31-8-1997 to 23-3-1998. The petitioner claims aba....
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....petitioner to amend the prayer portion of the writ application challenging the constitutional validity of the relevant provisions. After the order was received, the matter has been placed before us for disposal. 5. The petitioner, thereafter, filed a petition to add a prayer in the writ petition to challenge the constitutional validity of Section 3A of the Act. The said prayer was allowed. 6. Learned Counsel for the petitioner made three submissions. Firstly, he submitted that under the charging Section 3 of the Act, the excise duty is levied on all excisable goods as mentioned in the Schedule, which are actually produced or manufactured and not on the basis of the capacity of production and as such the provision of Section 3A of the Act empowering the Central Government to charge excise duty on the basis of the capacity of production in case of manufacture of non-alloy iron, steel ingots and billets is ultra vires. Secondly, he submitted that the abatement under Section 3A(3) of the Act is permissible even if one of the furnaces of the petitioner's factory is closed and it is not necessary that the factory as a whole should be closed. Elaborating this submission, he submitted th....
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....ty 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 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 only during a part of the year, the production thereof shall be calculated on proportionate basis of the annual capacity of production. (3) The duty of excise on notified goods shall be levied, at such rate as the Central Government may by notification in the Official Gazette specify, and collected in such manner as may be prescribed : Pr....
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....he Superintendent of Central Excise, either prior to the date of closure or on the date of closure; (b) the manufacturer shall intimate the reading of the electricity meter to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, with a copy to the Superintendent of Central Excise, immediately after the production in his factory is stopped along with the closing balance of stock of the ingots and billets of non-alloy steel; (c) the manufacturer, when he starts production again, shall inform in writing about the starting of production to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, with a copy to the Superintendent of Central Excise, either prior to the date of starting production or on the date of starting production; (d) the manufacturer shall on start of production again along with the closing balance of stock on restarting the factory, intimate the reading of the electricity meter to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, with a copy to the Superintendent of Central Excise; (e) the manufacturer shall while sending intimation under Clause (c), decla....
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....d fulfilled by a manufacturer of non-alloy steel ingots and billets for claiming abatement, while sub-rule (3) contains a provision with regard to payment of duty on compounding basis. 10. According to the said provision, the Central Government is empowered to charge excise duty on the basis of the capacity of production in respect of goods as notified in the Official Gazette and after the notification with regard to the notified goods is issued, the Central Government has been empowered by the rules to provide for determination of the annual capacity of production, or such factor or factors relevant for the annual capacity of production of the factory, in which such goods are produced by the Commissioner of Central Excise and such annual capacity production shall be deemed to be the annual production of such goods by such factory. It further provides that where a factory producing notified goods did not produce the notified goods during any continuous period of not less than seven days, abatement of duty calculated on a proportionate basis shall be allowed on fulfilment of the conditions as may be prescribed. It further provides that where the actual production of notified goods ....
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....xcise duty may be charged according to the said provision, on the basis of actual production but for the period of whole year. Shri Harish Salve, learned Counsel appearing for the Union of India submitted that there is no dispute with the offer made and also that the assessment shall be made for whole Period of one year namely the financial year. No dispute thus remains on the point and the excise duty shall accordingly be assessed in respect of matters not yet closed and still pending before the concerned authorities." 13. In the said case, however, the Apex Court decided the question as to whether a manufacturer is entitled to avail the benefit of sub-section (4) of Section 3A of the Act or not if he is paying excise duty according to the sub-rule (3) of Rule 96ZO, which provides for payment of excise duty on compounding basis. The Apex Court relying upon the decision of the Commissioner of Central Excise and Customs v. M/s. Venus Castings (P) Ltd., reported in 2000 (117) E.L.T. 273 (S.C.) = JT 2000 (4) S.C. 77 held that two procedure, namely, one as provided under sub-section (4) of Section 3A of the Act and the other as provided under sub-rule (3) of Rule 96ZO of Central Excis....
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....days then the question of abatement of duty on proportionate basis arises. It does not speak of a closure of only one or two furnaces in the factory. According to sub-rule (2) of Rule 96ZO for claiming abatement, the manufacturer has to inform in writing about the closure to the concerned authority either prior to the date of the closure or on the date of the closure. He will also intimate the reading of the electricity meter to the concerned authority immediately after the production in his factory is stopped along with the closing balance of stock of the ingots and billets of non-alloy steel. Again when he has to start the production, he has to fulfil the conditions as mentioned therein. 17. Thus, from the reading of the provisions of the Act and Rules framed thereunder, it is clear that only on the closure of factory as a whole for a period not less than seven days the question of abatement arises and not on the closure of one or other induction furnaces unit. Admittedly, in the case of the petitioner, both the units were closed but not at the same time as either of the units was always in production. Thus, the authorities rightly held that the petitioner cannot take the benefi....