2015 (10) TMI 1677 - AT - Central Excise

Determination of annual capacity of production - Rule 96ZO(2) - Held that - From the Rule, it can be seen that Rule does not envisage any application to be made by the manufacturer or the assessee. In this case, the appellant had requested the Deputy Commissioner to adjudicate the matter after personal hearing and had also stated that they are eligible for abatement. The proper course to be adopted by the Deputy Commissioner was to refer the matter to Commissioner for consideration. When Rules do not require any application to be made, denial of abatement on that ground cannot be sustained. - Therefore, in this case, the proceeding should not have been continued since it is not legal to continue with the same. - Decided in favour of assessee.

Summary

Issues:
1. Denial of abatement due to failure to make an application.
2. Interpretation of Rule 96ZO(2) regarding abatement conditions.
3. Applicability of the decision in Krishna Processors vs. UOI case.

Analysis:
1. The appellant, engaged in manufacturing M.S. Ingots, sought abatement for a period of non-production. The duty liability was determined by the Commissioner based on annual capacity. The dispute arose as the appellant did not produce ingots for a continuous period and claimed abatement without paying tax.

2. The main contention was the denial of abatement due to the absence of an application. The appellant argued that Rule 96ZO(2) does not mandate an application for abatement. The Rule specifies conditions for claiming abatement, such as informing authorities about factory closure and restarting production, without requiring a formal application. The Tribunal found the denial on this ground unsustainable.

3. The appellant cited the decision in Krishna Processors case, where the Hon'ble Gujarat High Court held certain rules ultra vires and stated that proceedings initiated after the omission of those rules were without legal authority. The Tribunal deemed the reliance on this decision appropriate and concluded that the proceedings in this case should not have been continued.

4. Ultimately, the Tribunal allowed the appeal, emphasizing that denial of abatement solely for not submitting an application was unjustified. The judgment highlighted that the Rules did not necessitate an application and referenced the legal precedent to support the conclusion that the proceedings should not have been pursued further. The appellant was granted relief based on the detailed analysis of the issues involved.