2018 (8) TMI 352 - AT - Central Excise

Benefit of abatement - Interpretation of statute - Sub Section 2 of Section 3A of Central Excise Act - assessee claimed that they are entitled to the benefit of proviso to Sub Section 2 of Section 3A which cannot be denied to them because Rule 96ZP (3) does not bar them from availing the benefit of this notification - Difference of opinion - Held that - Registry is directed to present the matter before Hon ble President of CESTAT for consideration of a Larger Bench to decide the question Whether the Sub-Section (2) of Section 3A which only deals with the powers of the Government of India, can be treated as a provision for abatement of duty by itself? If so, how that abatement under sub section 2 of Section 3A should be followed read with Rule 2 of Rule 96ZP? Matter Referred to Larger Bench.

Summary

Issues:
1. Interpretation of Section 3A of the Central Excise Act regarding duty liability for manufacturers of MS Re-rolling products.
2. Application of Rule 96 ZP of the Central Excise Rules for determination of duty.
3. Availability of abatement of duty for the period when the factory was closed.
4. Dispute regarding the benefit of abatement under Section 3A(2) and Rule 96ZP(3).
5. Appeal against Order-in-Appeal upholding the benefit of abatement.

Analysis:

1. The appeal involved a dispute over duty liability under Section 3A of the Central Excise Act for manufacturers of MS Re-rolling products. The Act empowers the Central Government to notify goods for duty collection based on annual factory capacity, with provisions for abatement and redetermination of duty under Section 3A(3) and 3A(4) respectively.

2. Rule 96 ZP of the Central Excise Rules provides procedures for duty determination. The rule offers two options for duty payment, with one option allowing a concessional rate of duty subject to certain conditions, including not availing benefits under Section 3 or Section 3A.

3. The issue of abatement of duty arose when the factory was closed, leading to a demand for duty payment during that period. The appellant argued for the benefit of abatement under the proviso to Section 3A(2) during the factory closure, while the department contested this claim.

4. The appeal raised questions regarding the availability of abatement under Section 3A(2) and Rule 96ZP(3). The department argued that the manufacturer, opting for the concessional rate of duty, is not entitled to abatement under Section 3A(3) and Rule 96ZP(2).

5. The Order-in-Appeal upheld the benefit of abatement for the appellant, leading to the appeal by the department. The Tribunal analyzed the provisions of Section 3A and Rule 96ZP, concluding that the appellant, availing the lower tax rate under Rule 96ZP(3), was not entitled to abatement under Section 3A(3) and Rule 96ZP(2).

6. Due to conflicting decisions, the Tribunal directed the matter to be presented before a Larger Bench to determine whether Section 3A(2) can be considered a provision for abatement and how it should be interpreted in conjunction with Rule 96ZP.

This comprehensive analysis highlights the key legal issues, interpretations, and arguments presented in the judgment, providing a detailed understanding of the case's complexities and the Tribunal's decision-making process.