2017 (11) TMI 691 - AT - Central Excise

Valuation - annual capacity based production - Section 3A of the Central Excise Act - N/N. 30/97-CE(NT), as amended by N/N. 43/97-CE(NT) - Held that - Hon ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills and others Vs Commissioner of Central Excise 2015 (11) TMI 1172 - SUPREME COURT wherein after considering the issue of repeal and/or omission of Rules 96Z0, 96ZP and 96ZQ with effect from 11th May, 2001, it was held that although the levy of the duty is saved but the levy of penalty and interest cannot be enforced - there can be no demand of interest and penalty under Rule 96-ZO - appeal allowed in part.

Summary

Issues:
Challenge to Order-in-Appeal for financial year 1998-99 - Duty confirmation, interest imposition, penalty under Rule 96-ZO of Central Excise Rules, 1944.

Analysis:
The appellant challenged the Order-in-Appeal for the financial year 1998-99, contesting the duty confirmation, interest imposition at 18% per annum, and the penalty of ?47,02,762 under Rule 96-ZO of Central Excise Rules, 1944. The appellant, engaged in the manufacture of M.S. ingots, was subject to duty levy under Section 3A of the Central Excise Act. The annual capacity of production was determined by the Commissioner based on the appellant's production of ingots. The modification in the annual capacity was made by the Commissioner through an Order-in-Original, requiring the appellant to discharge their duty liability in two equal installments. The appellant claimed to have deposited a substantial amount against the duty liability for the year 1998-99 but was alleged to have a remaining payable duty liability of ?5,91,605. A show cause notice was issued, leading to the confirmation of demands through an ex-parte Order-in-Original, which was upheld by the learned Commissioner (Appeals).

The appellant, aggrieved by the decision, appealed to the Tribunal, seeking the deletion of interest and penalty. The appellant relied on the ruling of the Hon'ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills, arguing that the levy of penalty and interest cannot be enforced post the repeal or omission of Rules 96-ZO, 96-ZP, and 96-ZQ. After hearing the arguments of the appellant and the revenue, the Tribunal considered the Supreme Court's ruling and concluded that no demand of interest and penalty under Rule 96-ZO could be made.

In light of the above, the Tribunal partially allowed the appeal by setting aside the levy of penalty and interest. The appellant was entitled to consequential benefits as per the law. The decision was made by Mr. Anil Choudhary, Member (Judicial), at the Appellate Tribunal CESTAT ALLAHABAD, as per the citation 2017 (11) TMI 691.