2015 (1) TMI 220 - HC - Central Excise

Exemption from payment of tax - benefit under proviso to Sub-Section (3) or Sub-Section (4) of Section 3A - abatement under Sub-section (3) of Section 3A - Held that - Once Sub-Rule (2) of Rule 96ZP of the Rules provides for filing of an application for abatement, it is just un-understandable as to how any exception can be taken by the Department, to the order passed in it. It is a different matter if the appellant is of the view that the respondent has run the factory during that period. That however is not the case. The main plank of the argument is that an application for abatement under Sub-Rule (2) of Rule 96ZP of the Rules is barred under Sub-Rule (3) thereof. We do not find such mandate therein. - Sub-Rule (3) creates the facility of payment of certain amount in accordance with the formula incorporated therein and the same would constitute compliance with the provisions of the Act and the Rules. The only rider added in that was that a manufacturer, who avails the benefit under Sub-Rule (2) shall not be entitled to claim the benefit under proviso to Sub-Section (3) of Sub-Section (4) of Section 3A of the Act. The application in the instant case is not under that provision. Sub-Rule (3) of Rule 96ZP of the Rules does not bar the filing of applications under Sub-Rule (2). It was not even alleged that after availing the benefit under Sub-Rule (2), the respondent got the benefit under Sub-Rule (3) or vice versa - Decided against Revenue.

Summary

Issues:
1. Determination of annual capacity under Rule 96ZP of the Central Excise Rules.
2. Application for abatement under Rule 96ZP(3) of the Rules.
3. Appeal filed by the Department against the order granting relief.
4. Interpretation of Rule 96ZP(2) and Rule 96ZP(3) of the Rules.

Analysis:
1. The respondent, a manufacturer of mild steel bars and rods, had its annual capacity determined for the assessment year 1999-00 under Rule 96ZP of the Central Excise Rules. The capacity was initially set at 2,40,250 metric tonnes but was later revised to 1,10,910 metric tonnes with effect from 01.10.1999 due to a change in factory parameters.

2. Subsequently, the respondent filed an application for abatement under Rule 96ZP(3) of the Rules, claiming that the factory did not operate between 09.09.1999 and 31.03.2000. The Commissioner granted relief by exempting the respondent from paying excise duty to the extent of Rs. 8,33,635. This decision was challenged by the Department through an appeal before the Tribunal, which was dismissed.

3. The issue arose regarding the Department's right to file an appeal against the Commissioner's order granting relief. The court noted that typically, departments only appeal when the original order is overturned in appeal. In this case, the Department appealed the initial order directly, raising doubts about the appeal process.

4. The court analyzed Rule 96ZP(2) and Rule 96ZP(3) of the Rules concerning abatement applications. It was observed that Rule 96ZP(3) allows for the payment of a specified amount under certain conditions, without barring applications under Rule 96ZP(2). The court emphasized that the respondent did not avail benefits under conflicting provisions, and the Tribunal's decision aligning with this interpretation was upheld. Consequently, the appeal was dismissed, and the petition was disposed of without costs.