2003 (8) TMI 387 - AT - Central Excise

Production capacity based duty - Composition payment - Appeal to Appellate Tribunal - Grounds - Departmental clarifications

Summary

Issues Involved:
1. Eligibility for abatement of duty under Rule 96ZO(2) of the Central Excise Rules, 1944.
2. Compliance with conditions specified in clauses (b) and (d) of Rule 96ZO(2).
3. Interpretation of Rule 96ZO(3) and its amendments.
4. Binding nature of circulars issued by the Central Board of Excise and Customs.

Issue-wise Detailed Analysis:

1. Eligibility for Abatement of Duty:
M/s. Jindal Electro Castings Pvt. Ltd. appealed against the Order-in-original dated 26-9-2001, which disallowed abatement of duty due to non-fulfillment of Rule 96ZO(2) conditions. The appellants claimed abatement for furnace closure periods between 1-3-1998 to 31-3-2000, arguing that electricity meter readings were provided until the State Electricity Board (SEB) disconnected power on 4-2-99. They also installed a D.G. set with a meter, verified and sealed by a Chartered Engineer, and claimed the jurisdictional Excise Officers verified the closure periods.

2. Compliance with Conditions Specified in Clauses (b) and (d) of Rule 96ZO(2):
The adjudicating authority disallowed the abatement claim due to non-compliance with clauses (b) and (d) of Rule 96ZO(2), arguing that without SEB electricity, the conditions couldn't be met. The appellants contended that electricity from sources other than SEB (like D.G. sets) is common and legal, and Rule 96ZO(2) does not specify that the meter must be installed by SEB. They provided meter readings from the D.G. set and argued that the Commissioner's assumption about the unreliability of the D.G. set meter was hypothetical.

3. Interpretation of Rule 96ZO(3) and Its Amendments:
The Revenue argued that under Rule 96ZO(3), the appellants were not eligible for abatement, citing judgments from the Andhra Pradesh High Court and the Supreme Court. The appellants countered that Rule 96ZO(3) was amended by Notification No. 44/97-C.E., dated 30-8-97, to allow abatement under Section 3A(3). The Commissioner's order also acknowledged the eligibility for abatement if conditions under Rule 96ZO(2) were met. The Tribunal noted that no appeal was filed by the Revenue against this finding.

4. Binding Nature of Circulars Issued by the Central Board of Excise and Customs:
The Tribunal highlighted that the Ministry's Circular No. 331/47/97-CX, dated 30-8-97, clarified that Rule 96ZO was amended to allow abatement for induction furnace units closed for seven or more days. The Supreme Court in CCE, Vadodara v. Dhiren Chemical Industries held that such circulars are binding on Revenue, even if contrary to the Supreme Court's interpretation. The Tribunal concluded that the appellants were eligible for abatement as they complied with Rule 96ZO(2) by providing meter readings from the D.G. set, verified by a Chartered Engineer.

Conclusion:
The Tribunal allowed the appeal, holding that the appellants were eligible for abatement of duty under Rule 96ZO(2) as they fulfilled the required conditions, including providing meter readings from the D.G. set. The Tribunal emphasized the binding nature of the Ministry's circular, which supported the appellants' claim.