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TMI Blog2014 (5) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... decided by or through subordinate legislation when it states that “There shall be levied & collected in such manner as may be prescribed”. This Section 3A therefore severs the so called nexus of levy, which is essential according to petitioner, with quantity actually produced and subjects “deemed annual production” to levy. Even Rule 5 of 2008 Rules is about the quantity deemed to be produced. Recovery of duty in advance in this situation on deemed production in systematic manner does not offend & has no connection with Section 3. Legislature found it in public interest to subject notified goods to a different treatment & there is no challenge to this treatment or classification in S. 3-A. If any challenge to the legislative wisdom is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods not in existence i.e. still to be produced or to be manufactured, such levy charged in advance is not sustainable as per scheme of Section 3. On the same ground consequential provision made by substituting 7th proviso to Rule 9, by Notification, dated 27-2-2010 is also assailed. It is submitted that when there cannot be any such liability in law, the provision of penalty for its non-discharge is liable to be quashed and set aside. 5. The learned Assistant Solicitor General has relied upon the reply affidavit. He submits that rules as framed are under Section 3A of Central Excise Act, 1944 and that Section permits Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. He contends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such factory; or (b)(i) specify the factor relevant to the production of such goods and the quantity that is deemed to be produced by use of a unit of such factor; and (ii) provide for the determination of the annual capacity of production of the factory in which such goods are produced on the basis of such factor by an officer not below the rank of Assistant Commissioner of Central Excise and such annual capacity of production shall be deemed to be the annual production of such goods by such factory : Provided that where a factory producing notified goods is in operation during a part of the year only, the annual production thereof shall be calculated on proportionate basis of the annual capacity of production : Provided fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production of such goods by such factory, on which an assessee is liable to pay duty. The two provisos to sub-section (2) of Section 3A of the Act, provide for determination/redetermination of annual capacity of production in the event of operation of the factory during a part of the year or alteration or modification in any of the factors relevant to the production of the factory. 21. As noted above, Section 3A was inserted in the Act to enable the Central Government to levy excise duty on manufacture or production of certain notified goods on the basis of annual capacity of production to be determined by the Commissioner of Central Excise in terms of the Rules to be framed by the Central Government. Section 3A of the Act is an excepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction in respect of notified goods. It opens with non obstante clause, and therefore, it expressly overrides Section 3 supersedes the alleged scheme contemplated in Section 3. Under it annual capacity of production determined as prescribed therein is deemed to be the annual production of such goods by the assessee factory this deeming fiction is incorporated to protect interest of revenue. This sub-section permits collection of the duty in such manner as may be prescribed by the Rules. This concept of capacity production has been extended only to notified goods and those goods have to be of description as contained in its sub-section (1). There is provision for calculation of annual capacity on proportionate basis, where the factory p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced. Recovery of duty in advance in this situation on deemed production in systematic manner does not offend has no connection with Section 3. Legislature found it in public interest to subject notified goods to a different treatment there is no challenge to this treatment or classification in S. 3-A. If any challenge to the legislative wisdom is possible open, it is also not an issue presented before us. We are not called upon to consider validity of 2008 Rules in the light of S. 3A or then validity of S. 3A in any way, in above perspective under Central Excise Act, 1944. 10. 2008 Rules are framed due to powers conferred by to advance the object of Section 3A and are not shown to be inconsistent with it. Attempt to co-relate the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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