D. Biswas, J.
1. The above mentioned writ petitions pose a common question of law for adjudication. Hence, all these writ petitions are taken up together for disposal.
2. Mr. G.N. Sahewalla, learned senior counsel represented the writ petitioners in W.P.(C) No. 2366 of 1998. The learned counsel appearing for the petitioners in other writ petitions adopted the argument advanced by Shri Sahewalla. Shri B. Sharma, learned Addl. Central Government Standing Counsel appeared for the respondent Union of India.
3. In Civil Rule No. 2366 of 1998, the petitioner Company challenged the order dated 24-10-1997 (Annexure-IX) passed by the Assistant Commissioner (Central Excise), Tinsukia whereby excise duty has been levied payable at the rate of Rs. 4,16,666/- per month. The petitioner Company prayed for direction for re-determination of the excise duty with alternative prayer for direction to the authority for accepting Rs. 3,12,500/- per month and not Rs. 4,16,666/-. In other writ petitions, similar orders passed by the Respondent authority have been challenged with prayers for identical relief as in Civil Rule No. 2366 of 1998. The allegations made are of arbitrary determination of excise duty in violation of the provisions of law.
4. Section 3A was inserted by the Finance Act of 1997 providing for determination of annual capacity of production of a factory for levy of excise duty. The Central Excise Act, 1944 thus stood amended providing for powers with the Central Government to make Rules for determination of the annual capacity of production for levying of excise duty. Sub-section (2) of Section 3A of the Central Excise Act, 1944 vested powers with the Central Government to make rules for determination of annual capacity of production. In exercise of this power, the Central Government made the Induction Furnace Annual Capacity Determination Rules, 1997 which prescribed the mode for assessment of annual capacity. Procedure has been prescribed for realization of excise duty payable on account of installation and operation of furnace, There is in fact no dispute that the determination of excise duty is entirely based on annual production capacity of a factory to be determined by the Commissioner of Central Excise on consideration of the factors and circumstances relevant to the production of notified goods in a factory. But here is not the end. The provisions in Sub-section (4) of Section 3A the Act of 1944 provide for some concession in a case where the assessee claims that the annual production of a notified goods in his factory is lower than the annual production capacity. The Commissioner of Central Excise, in such cases, is required to determine the actual production and levy the amount of duty payable thereon after giving an opportunity to the assessee to produce evidence in support of his claim. The exercise in this behalf will have to be in conformity with the provisions of Sub-rule (3) of Rule 3 of the Rules of 1977 which prescribe a formulae for the purpose of calculation of the excise duty. Any action taken in violation of the aforesaid provision would obviously render the assessment as non est in the eye of law.
5. By the Notification No. 27/97, dated 25th July, 1997, the Central Government in exercise of powers conferred under Section 37 of the Act of 1944 inserted certain provisions of which Rule (2) provide for abatement under subsection (3) of Section 3A of the Act of 1944 in the case where a manufacturer does not produce the ingots and billets of non-alloy steel during any continuous period of not less than seven days subject to fulfilment of certain conditions.
6. Mr. G.N. Sahewalla, learned senior counsel submitted that the petitioner factory of Civil Rule No. 2366 of 1998 was not in operation continuously throughout the year due to power cut imposed by the Assam State Electricity Board. The Appeal dated 27-9-1997 preferred by the petitioner Company detailing the actual state of affairs during the relevant period was not taken into consideration before the impugned order dated 24-10-1997 was issued. Hence, the learned counsel urged that the Commissioner may be directed to review the entire matter after taking into consideration all the grounds set in the appeal dated 27-9-1997 and to re-determine the excise duty strictly in accordance with the above provisions of law.
7. The respondent authority in their affidavit-in-opposition controverted the averments of the writ petitioner Company and submitted that the assessee Company having opted to pay duty under Sub-rule (3) of Rule 96ZO of the Rules is not entitled to the benefit of reduction/abatement under Sub-section (4) of Section 3A of the Central Excise Act, 1944. In para-8 of the affidavit, it has been emphatically submitted that as the assessee has opted for lumpsum payment of excise duty as per Sub-rule (3) of Rule 96ZO of the Rules, the benefit available under Sub-section (4) of Section 3A of the Act of 1944 cannot be availed of by them. The determination of the Assistant Commissioner of Excise, Tinsukia has been made as per declaration of the petitioner-assessee and in compliance with the provisions of Sub-rule (3) of Rule 96ZO of the Rules.
8. Mr. B. Sharma, learned C.G.S.C. argued that the petitioner Company is not entitled to abatement of central excise duty on account of restriction of power supply by ASEB in view of the option exercised under Sub-rule (3) of Rule 96ZO of the Central Excise Rules, 1944. Mr. Sharma further submitted that there is no denial to the averments made by the respondent authority that the petitioner Company has exercised option under Sub-rule (3) of Rule 96ZO. In this context, it would be relevant to refer to the provisions in Sub-rule (3) of Rule 96ZO. The relevant part of the aforesaid Rule is quoted below :-
'96ZO (3) Notwithstanding any contained elsewhere in these rules, if a manufacturer having a total furnace capacity of 3 metric tonnes installed in his factory so desires, he may, from the first day of September, 1997 to the 31st day of March, 1998 or any other financial year, as the case may be, pay a sum of rupees five lakhs per month in two equal instalments, the first instalment latest by the 15th day of each month, and the second instalment latest by the last day of each month, and the amounts so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st day of September, 1997 to the 31st day of March, 1998, or any other financial year, as the case may be, subject to the condition that the manufacturer shall not avail of the benefit, if any, under Sub-section (4) of the Section 3A of the Central Excise Act, 1944 (1 of 1944):
Provided that for the month of September, 1997 the Commissioner may allow a manufacturer to pay the sum of rupees five lakhs by the 30th day of September, 1997.
Provided further that if the capacity of the furnaces installed in a factory is more than or less than 3 metric tonnes, or there is any change in the total capacity, the manufacturer shall pay the amount calculated pro rata :
Provided...............'
9. The provisions incorporated in Sub-rule (3) quoted above clearly show that in case a manufacturer/assessee opts to avail the provision of lump-sum payment of duty as indicated in Sub-rule (3), such manufacturer/assessee is not entitled to the benefit under Sub-section (4) of Section 3A of the Act of 1944. However, in my considered opinion, the petitioners' case can be considered for abatement if it is covered by the second proviso quoted above. The provisions for abatement will apply in a factory if the capacity of the furnaces installed in the factory undergo a change or other circumstances relatable to the situation mentioned in the second proviso exist even if the Company has exercised option for lumpsum payment under Rule 96ZO.
10. The petitioner Companies in other writ petitions also stand on the same footing inasmuch as that they have claimed abatement under Sub-section (4) of Section 3A, allegedly after having opted to avail the benefit under Sub-rule (3) of Rule 96ZO. Mr. Sharma, learned Addl. C.G.S.C. during the course of argument suggested that if at all there is any doubt as to whether the petitioner Companies have had opted to avail the benefit under Sub-rule (3) of Rule 96ZO, the matter may be referred to the Commissioner of Excise for verification and follow-up action.
11. In consequence of the discussion above, all these writ petitions stand disposed of. The Commissioner of Excise is directed to verify as to whether all the Companies have exercised their option to avail of the benefit under Rule 96ZO and, on such verification, if it is found that no option has been exercised as alleged, the impugned orders relatable to the Companies shall be reviewed and benefit of abatement under Section 3A shall be extended to them. Even in cases where the Companies have exercised option, but circumstances still exists as provided in second proviso to Rule 96ZO, the Commissioner shall cause an enquiry, consider all relevant factors and circumstances and review the quantum of excise duty levied. It is needless to say that the petitioner Companies may be heard in the process of decision making.
12. All the writ petitions are accordingly disposed of subject to above direction.
No costs.