2014 (9) TMI 410 - HC - Central Excise

Determination of annual capacity of production (ACP) - manufacture of Ingots and Billets - Notification Nos.30/97-C.E.(N.T.), dated 1.8.1997 and 31/97-C.E.(N.T.), dated 1.8.1997 - Held that - From the beginning, the assessee had claimed that it has opted for compounded levy scheme under Rule 96ZO(3) of the Rules, by making a declaration under Rule 96ZO(4) of the Rules. There is no dispute on this fact and, therefore, it will not lie in the mouth of the appellant to plead that there was no declaration in terms of Rule 96ZO(4) of the Rules. Tribunal has set aside the first ACP order dated 16.9.1997 for reconsideration by the jurisdictional Commissioner. As there is no first ACP order subsisting, the show cause notice dated 4.5.1998 for the period from September, 1997 to March, 1998 based on the first ACP order dated 16.9.1997 will have to be reworked only after appropriate ACP order is passed for that period. Therefore, in terms of the order of the Tribunal, the jurisdictional Commissioner will have to pass fresh ACP order after hearing the appellant in terms of the order of the Tribunal and thereafter a show cause notice is to be issued for the period September, 1997 to March, 1998. For this period alone, the appeal is partly allowed by way of remand.

Summary

Issues Involved:
1. Validity of demand for duty under Rule 96ZO(3) of the Central Excise Rules.
2. Requirement of a declaration under Rule 96ZO(4) for opting to pay duty on a lump sum basis.
3. Correctness of the Annual Capacity Production (ACP) orders.
4. Entitlement to abatement claims under Section 3A(3) of the Central Excise Act.
5. Legality of the demand notices issued for various periods.

Detailed Analysis:

1. Validity of Demand for Duty under Rule 96ZO(3):
The appellant, an industry manufacturing Ingots and Billets, was initially assessed for duty based on the Annual Capacity Production (ACP) determined by the jurisdictional Commissioner. The appellant opted to discharge duty liability under Rule 96ZO(3) of the Central Excise Rules, which allows for a lump sum payment. The Commissioner confirmed the duty demand based on the ACP determined, and the Tribunal upheld this decision, noting that the demand was in line with the ACP order and no abatement claims were pending. The Tribunal stated, "the demand of duty raised on the appellants on the basis of the said order is sustainable in law."

2. Requirement of Declaration under Rule 96ZO(4):
The appellant contended that they did not file a declaration under Rule 96ZO(4), which is a prerequisite for opting to pay duty on a lump sum basis under Rule 96ZO(3). However, the court found that the appellant had indeed opted for the compounded levy scheme and made the necessary declaration. The judgment noted, "it will not lie in the mouth of the appellant to plead that there was no declaration in terms of Rule 96ZO(4) of the Rules."

3. Correctness of the ACP Orders:
The appellant challenged the ACP order dated 16.9.1997, arguing that one of the furnaces was not working properly. The Tribunal set aside this order for reconsideration by the jurisdictional Commissioner. Consequently, the show cause notice based on this ACP order for the period from September 1997 to March 1998 was also set aside, and the matter was remanded for a fresh ACP order. The court stated, "the jurisdictional Commissioner will have to pass fresh ACP order after hearing the appellant in terms of the order of the Tribunal."

4. Entitlement to Abatement Claims:
The appellant's claim for abatement under Section 3A(3) due to stoppages of production was rejected by the Commissioner, who found no abatement claims pending. The Tribunal concurred, noting that "there was no abatement claim of the assessee pending and, therefore, held that the entire amount is to be recovered."

5. Legality of the Demand Notices:
The demand notices issued for various periods were based on the ACP orders. The court found that the second ACP order of June 1998, which was not set aside or challenged, covered the periods after 1.4.1998. Therefore, the demands for these periods were upheld. The judgment concluded, "the appeal of the assessee insofar as it challenges the demand for duty, etc. based on the show cause notices issued for the periods... stands dismissed."

Conclusion:
The appeal was partly allowed concerning the period from September 1997 to March 1998, requiring a fresh ACP order and subsequent show cause notice. For other periods, the appeal was dismissed, upholding the duty demands based on the second ACP order. The court affirmed the requirement of a declaration under Rule 96ZO(4) and the validity of the compounded levy scheme's application. The appeal was thus "partly allowed, as stated above. No costs. Consequently, M.P.No.1 of 2007 is closed."