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2015 (9) TMI 827 - HC - Central ExciseDuty demand - Abatement under Rule 96ZQ(7) (e) of Central Excise Rules, 1994 - Held that - In the decision reported in 2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS , in the case of Beauty Dyers vs. Union of India, this Court has held that Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998; Rules framed under Notification Nos. 14/2000-C.E. (N.T.) and 19/2000-C.E. and Notification No. 2/99-C.E. are ultra vires of erstwhile Section 3A of the Central Excise Act, 1944. - In view of the order passed by this Court in the case of Beauty Dyers vs. Union of India reported in 2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS in and by which the Hot Air Stenter Independent Textile Processors Annual Capaciy Determinatin Rules, 1998 are held to be ultra vires of erstwhile Section 3A of the Central Excise Act, 1944, the questions of law raised in these two appeals become acadamic in nature - Appeal disposed of.
Issues:
1. Dismissal of appeals by the Revenue against dropping of demands of duty in favor of the assessee. 2. Justification of the Tribunal in dismissing the appeals. 3. Requirement of duty payment before claiming abatement under Rule 96ZQ(7)(e) of Central Excise Rules, 1994. 4. Consideration of a revenue-neutral situation without imposing mandatory penalty under Rule 96ZQ of the Central Excise Rules, 1944. 5. Ultra vires status of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998. Issue 1 - Dismissal of Appeals: The High Court of Madras addressed the Civil Miscellaneous Appeals filed by the Revenue against the Customs, Excise and Service Tax Appellate Tribunal's decision to dismiss the appeals filed by the Revenue. The appeals were dismissed due to the dropping of demands of duty in favor of the assessee for specific material periods. The High Court admitted the appeals based on substantial questions of law raised regarding the justification of the Tribunal's decision. Issue 2 - Justification of Tribunal's Decision: The Tribunal justified its decision by examining the provisions of Section 3A of the Act and relevant circulars. It emphasized that the Board's circular allowed an independent textile processor to claim abatement of duty without being compelled to pay duty first and then claim abatement. The Tribunal noted a revenue-neutral situation in the case and upheld the order of the Commissioner (Appeals) without commenting on case law, leading to the dismissal of the appeals. Issue 3 - Duty Payment Requirement for Abatement: The case involved an independent processor engaged in the manufacture of processed textile fabrics under a compounded levy scheme. The Range Officer issued show cause notices for non-payment of duty, leading to demands for duty, interest, and penalties under Rule 96ZQ of the Central Excise Rules, 1944. The question arose whether duty should be paid first before claiming abatement under Rule 96ZQ(7)(e) of the Central Excise Rules, 1994. Issue 4 - Revenue-Neutral Situation and Penalty Imposition: The Tribunal considered the provisions of Section 3A and Rule 96ZQ in the context of abatement claims by independent textile processors. It found that a revenue-neutral situation existed in the case and that the abatement claims would not have been rejected even if filed after duty payment. The Tribunal upheld the order of the Commissioner (Appeals) and dismissed the appeals without imposing the mandatory penalty under Rule 96ZQ of the Central Excise Rules, 1944. Issue 5 - Ultra Vires Status of Rules: Referring to a previous decision regarding Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998, the Court held that these rules were ultra vires of the erstwhile Section 3A of the Central Excise Act, 1944. Consequently, the questions of law raised in the appeals became academic in nature, leading to the closure of the Civil Miscellaneous Appeals.
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