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2012 (5) TMI 409 - AT - Central ExciseProduction based duty of excise - section 3A - held that - law laid down by the Hon ble Supreme Court in Venus Castings case(2000 (4) TMI 37 (SC)), is fairly applicable to the facts of the case for determination of the dispute. - Their Lordship had ruled against a hybrid system of facility both under Rule 96ZP(1) and under Rule 96ZP(3) of the erstwhile Central Excise Rules, 1944, in discharging duty under Section 3A of the Central Excise Act, 1944. - matter remanded back to the lower Adjudicating Authority for determining afresh as to whether the Appellant during the relevant period, i.e.1999-2000, had exercised their option under Rule 96ZP(1) or Rule 96ZP(3) of the erstwhile Central Excise Rules, 1944 and consequently, determine their liability for the said period.
Issues Involved:
1. Determination of duty liability under Section 3A of the Central Excise Act, 1944. 2. Validity of the compounded levy scheme under Rule 96ZP of the Central Excise Rules, 1944. 3. Applicability of the alternative procedures under Rule 96ZP(1) and Rule 96ZP(3). 4. Consideration of actual production versus annual capacity determination. 5. Compliance with procedural requirements and exercise of options by the assessee. Detailed Analysis: 1. Determination of Duty Liability under Section 3A of the Central Excise Act, 1944: The Appellant, engaged in manufacturing MS Bars and Rods of non-alloy steel, was subject to excise duty under Section 3A of the Central Excise Act, 1944. The duty was initially fixed based on the annual capacity determined by the Commissioner of Central Excise. The Appellant defaulted on duty payments, leading to the issuance of show cause notices and confirmation of duty demands along with penalties. 2. Validity of the Compounded Levy Scheme under Rule 96ZP of the Central Excise Rules, 1944: The Appellant had opted for the compounded levy scheme under Rule 96ZP(3) by filing a declaration on 19.08.1997. This scheme allowed for the discharge of duty liability on a lump-sum basis. The Appellant later sought to pay duty based on actual production, referencing an interim order from the Supreme Court in the case of Union of India vs. Supreme Steels and General Mills Steel (2001). 3. Applicability of Alternative Procedures under Rule 96ZP(1) and Rule 96ZP(3): The Supreme Court's decision in Commissioner of Central Excise and Customs vs. Venus Castings Pvt. Ltd. (2000) clarified that an assessee could not adopt a hybrid procedure combining Rule 96ZP(1) and Rule 96ZP(3). The Appellant initially opted for Rule 96ZP(3) but later attempted to switch to Rule 96ZP(1) for subsequent periods, arguing that they were paying duty based on actual production. 4. Consideration of Actual Production versus Annual Capacity Determination: The Appellant contended that their actual production during 1999-2000 was significantly lower than the capacity determined by the Commissioner. They argued that they should be allowed to pay duty based on actual production under Section 3A(4) of the Central Excise Act, 1944. The Tribunal noted that the Appellant had not consistently communicated their intention to switch to Rule 96ZP(1) and had continued to pay duty at the rate applicable under Rule 96ZP(3). 5. Compliance with Procedural Requirements and Exercise of Options by the Assessee: The Tribunal examined whether the Appellant had properly exercised their option to switch from Rule 96ZP(3) to Rule 96ZP(1). The Appellant's letter dated 19.08.1998, which referenced the Supreme Court's interim order, did not explicitly state a switch to Rule 96ZP(1). The Tribunal found that the Appellant had not clearly communicated their intention to opt out of Rule 96ZP(3) and had continued to pay duty at the lower rate applicable under Rule 96ZP(3). Conclusion: The Tribunal remanded the matter to the lower Adjudicating Authority to determine afresh whether the Appellant had exercised their option under Rule 96ZP(1) or Rule 96ZP(3) during the relevant period (1999-2000). The lower authority was directed to give the Appellant a fair opportunity to present their case and determine their duty liability accordingly. The appeals were allowed by way of remand, and the stay petitions were disposed of. Pronounced on 26.04.2012.
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