2004 (2) TMI 559 - AT - Central Excise

Summary

Issues:
1. Commissioner's order passed in de novo proceedings.
2. Confirmation of demand based on annual capacity fixed.
3. Exercise of option for payment of duty under 96ZP(3).
4. Interpretation of Supreme Court ruling on assessment basis.
5. Assessment of duty liability in accordance with Section 3A(4).

Analysis:

1. The judgment addresses the issue of the Commissioner's order passed in de novo proceedings. The Commissioner, instead of following the direction to fix the duty liability based on actual production, confirmed the demand based on the annual capacity fixed. This deviation from the directive was a key point of contention in the case.

2. The confirmation of demand was for the financial years 1998-99 and 1999-2000. The appellant had not exercised any separate options for payment of duty under 96ZP(3) for these years, except for the financial year 1997-98. The appellant's communication to the Commissioner regarding paying duty based on actual production was not accepted as an option exercised under the relevant provision.

3. The interpretation of the Supreme Court ruling in the case of Supreme Steels and General Mills was crucial. The Court held that once an assessee opts for Rule 96ZO(3), assessment based on actual production under Section 3A(4) during the same financial year is not permissible. Since no option was exercised for Rule 96ZP(3) for the years in question, the Tribunal opined that the duty liability should have been assessed in accordance with Section 3A(4) and the Tribunal's order.

4. The Tribunal found that the appellant had a strong prima facie case, considering the absence of an option exercised for Rule 96ZP(3) for the relevant years. Consequently, the stay petition was unconditionally allowed, and the appeal was scheduled for final disposal on a specified date.

5. In conclusion, the judgment focused on ensuring the correct assessment of duty liability in accordance with the applicable legal provisions and previous directives, highlighting the importance of properly exercising options under the law to determine the appropriate basis for duty calculation.