2014 (12) TMI 1088 - AT - Central Excise

Duty demand under Rule 96 ZO - whether the duty liability of the appellants for the year 1999-2000 is to be assessed in terms of Rule 96 ZO(3) after considering the plea of the appellants that for the financial year 1999-2000 under Rule 96 ZO(3), the option as required under Sub-Rule (3) of Rule 96 ZO had not been given by them - Held that - As has been recorded by CESTAT in its order dated 7.10.2005 the appellants filed necessary declaration opting to pay duty under Rule 96 ZO(3) in the year 1997 and also again on 1.4.1998. The said Rule does not require filing of declaration on an annual basis. Indeed the format of the declaration prescribed under Rule 96 ZO(4) also makes it clear that the declaration is not for any particular financial year nor is it required to be filed for every financial year. - Even the appellants declarations did not indicate that they were valid only for one financial year. Therefore unless the appellants specifically opted out of the scheme, the declarations they filed opting for the compounded levy scheme obviously continued to be valid. The Supreme Court in the case of CCE Vs. Venus Castings Pvt. Ltd. - 2000 (4) TMI 37 - SUPREME COURT OF INDIA has held that the assessee if they have availed of the procedure under Rule 96 ZO(3) at their option, cannot claim the benefit of determination of production capacity under Section 3A(4) of the Central Excise Act, 1944 which is specifically excluded. This itself means that the assessee can opt out of the scheme at the end of the financial year. It is matter of record that the assessee never opted out of the compounded levy scheme after having opted in for the same. Letters cited by them only show that they were not happy with the quantum of duty liability in terms of the said Rule 96 ZO(3). But such unhappiness can never be equated to a formal opting out of the scheme. For example, expressing unhappiness in a marriage can never be taken to be tantamount to opting for divorce. Thus it is evident that in the wake of the fact that the appellants never opted out after having opted in for paying under Rule 96 ZO(3) , they continued to be liable to be assessed thereunder. There is not even an iota of doubt that there was no requirement to file the option to opt for the scheme in every financial year. Similarly, there is no ground to even suggest that the declaration to opt for the scheme was valid only for one financial year. Thus once having opted in, one had to expressly opt out of the same. Appellants were liable for payment of duty for the year 1999-2000 under Rule 96 ZO - Decided against assessee.

Summary

Issues:
1. Interpretation of Rule 96 ZO(3) regarding duty liability assessment for the financial year 1999-2000.
2. Validity of declarations filed by the appellants under Rule 96 ZO(3).
3. Consideration of plea regarding the option under Sub-Rule 3 of Rule 96 ZO for the financial year 1999-2000.
4. Applicability of the Supreme Court's decision in CCE Vs. Venus Castings Pvt. Ltd. on opting out of the compounded levy scheme.

Analysis:

1. The judgment revolves around the duty liability assessment for the financial year 1999-2000 under Rule 96 ZO(3). The appellants argued that since they did not opt for the compounded levy scheme for that year, the assessment under Rule 96 ZO was not valid. However, the Tribunal found that the declarations filed by the appellants in 1997 and 1998 opting for Rule 96 ZO(3) did not specify a time limit, indicating a continuous validity unless explicitly opted out. The Supreme Court's decision in CCE Vs. Venus Castings Pvt. Ltd. was cited to emphasize that once opted in, opting out was necessary to change the assessment basis.

2. The validity of the declarations filed by the appellants was a key point of contention. The format of the declaration under Rule 96 ZO(4) did not mention a specific financial year, and the absence of an annual filing requirement indicated a continuous application of the scheme unless opted out. The Supreme Court's ruling further supported the view that opting out was a formal process necessary to change the assessment method.

3. The plea regarding the option under Sub-Rule 3 of Rule 96 ZO for the financial year 1999-2000 was raised by the appellants. They argued that the lack of an option for that specific year should exempt them from duty liability under Rule 96 ZO. However, the Tribunal held that since the appellants did not opt out after opting in previously, they remained liable under the compounded levy scheme for the financial year in question.

4. The judgment also addressed the applicability of the Supreme Court's decision in CCE Vs. Venus Castings Pvt. Ltd. regarding opting out of the compounded levy scheme. It emphasized that expressing dissatisfaction with the duty liability did not equate to opting out of the scheme. The decision highlighted that once opted in, a formal opt-out was required to change the assessment basis, and the absence of such action meant continued liability under Rule 96 ZO(3).

In conclusion, the Tribunal upheld the duty liability assessment for the financial year 1999-2000 under Rule 96 ZO(3) based on the continuous validity of the appellants' declarations and the requirement to formally opt out of the compounded levy scheme as per legal precedents. The judgment focused on the specific issue raised by the appellants and clarified the legal obligations regarding opting in and out of the scheme.