Keshav Nilu Steels (P) Ltd. Vs. Cce

Keshav Nilu Steels (P) Ltd. vs Cce

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Aug 25, 2003

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Citation: sooperkanoon.com/31938
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Judge: K Usha, N T C.N.B.
Decided On: Aug 25, 2003
Subject: Excise

Case Summary

AI-generated summary - not the official court judgment text.

Excise

Key legal issue: Excise

Parties & Advocates

Appellant / Petitioner

Keshav Nilu Steels (P) Ltd.

Respondent

Cce

Legal References

Reported In: (2003)(90)ECC653

Excerpt

.....as under: "(b). that duty of excise of chapter 72 is prescribed in schedule to the central excise tariff act, 1985 which has authority of law. the levy and rate prescribed in the schedule is a compulsory obligation to be discharged by the manufacturer of the goods of chapter 72." the appellant also has submitted that it had not opted for payment of duty under rule 96zo(3).2. as against this, the submission of the revenue is that the appellant had discharged duty as specified in sub-rule (3) of rule 96zo of the central excise rules in terms of compounded levy scheme and that, that rule specifically excludes re-fixation of duty liability under sub-section (4) of section 3a of the central excise act, 1944. it is also pointed out that in view of the decision of the apex court in the case of commissioner, customs & central excise v. venus castings (p) ltd., it is not open for the appellant to seek payment of duty on actual production.3. we have perused the records and have considered the submissions made by both sides. compounded levy scheme is an alternative scheme for collection of duty. this is made clear by the non-obstante clause with which section 3a opens: "notwithstanding anything contained in section 3" (section 3 being the provision levying duty based on production).4. levy of duty on compounded basis has been sustained by the supreme court in the case of commissioner, customs & central excise v. venus castings (p) ltd. the apex courtunion of india v. supreme steel & general mills, 2001 (78) ecc 225 (sc): 2001 (133) elt 513 (sc) that an assessee opting to pay duty under rule 96zo(3) cannot opt out during that financial year.5. it is clear from the legal provision in section 3a of the central excise act and the aforesaid judgments that an assessee manufacturing goods specified under section 3a cannot seek to pay duty based on the actual production in terms of section 3. once the goods are specified under section 3a the basis of the levy will.....

Full Judgment

1. The appellant manufactures MS Ingots etc. under induction furnace process. Under Notification No. 23/97-CE(NT) dated 25.7.97 and 30/97 dated 1.8.97 such goods were brought under the provisions of Section 3A of the Central Excise Act, 1944. This has the effect of imposing duty at compounded rates. The present appeal challenges duty demand at compounded rates and seeks levy of duty based on the actual production.

Ground (B) of the Appeal states as under: "(B). That duty of excise of Chapter 72 is prescribed in Schedule to the Central Excise Tariff Act, 1985 which has authority of law. The levy and rate prescribed in the schedule is a compulsory obligation to be discharged by the manufacturer of the goods of Chapter 72." The appellant also has submitted that it had not opted for payment of duty under Rule 96ZO(3).

2. As against this, the submission of the Revenue is that the appellant had discharged duty as specified in Sub-rule (3) of Rule 96ZO of the Central Excise Rules in terms of Compounded Levy Scheme and that, that rule specifically excludes re-fixation of duty liability under Sub-section (4) of Section 3A of the Central Excise Act, 1944. It is also pointed out that in view of the decision of the Apex Court in the case of Commissioner, Customs & Central Excise v. Venus Castings (P) Ltd., it is not open for the appellant to seek payment of duty on actual production.

3. We have perused the records and have considered the submissions made by both sides. Compounded Levy Scheme is an alternative scheme for collection of duty. This is made clear by the non-obstante clause with which Section 3A opens: "notwithstanding anything contained in Section 3" (Section 3 being the provision levying duty based on production).

4. Levy of duty on compounded basis has been sustained by the Supreme Court in the case of Commissioner, Customs & Central Excise v. Venus Castings (P) Ltd. The Apex CourtUnion of India v. Supreme Steel & General Mills, 2001 (78) ECC 225 (SC): 2001 (133) ELT 513 (SC) that an assessee opting to pay duty under Rule 96ZO(3) cannot opt out during that financial year.

5. It is clear from the legal provision in Section 3A of the Central Excise Act and the aforesaid judgments that an assessee manufacturing goods specified under Section 3A cannot seek to pay duty based on the actual production in terms of Section 3. Once the goods are specified under Section 3A the basis of the levy will be the capacity of production. As against this, the appellant's demand is that duty be collected on actual production. This demand is clearly contrary to the scheme of levy of duty on a compounded basis which remains upheld by the Apex Court. We do not also find substance in the appellant's contention that it had not opted to discharge duty under Rule 96ZO(3).

Firstly, as a matter of fact, it made payment of duty at amounts mentioned in that sub-rule. That permits a manufacturer, if he so 'desires', to pay the fixed sum mentioned in the sub-rule. Secondly, the appellant's demand all along was to pay duty on a basis contrary to the compounded levy scheme. That the appellant was seeking the impossible is clear from its letter dated 12.9.97 which is reproduced below: (Through: Superintendent of Centra) Excise, Ghazipur) Dear Sir, Sub: Determination of Annual Capacity of Production under Notification No. 24/97 CE (NT) dated 25.7.97-Vis-a-vis Sub-section (4) of Section 3A of C.E.S.A., 1944: Corr. reg.

The Superintendent of Central Excise, Ghazipur vide his office C. No. 25/CE/Misc/KNC/97/414 dated 2.9.97 has asked for our option in terms of Sub-rule (3) of Rule 96ZO. 2. We have not so far submitted our option as we feel that the actual production of notified goods in our factory is lower and duty liability should be much lesser than Rs. 5 lakhs per month. Option as envisaged in Sub-rule (3) of Rule 96ZO is subject to the condition that we shall not avail of the benefit, if any, under Sub-section (4) of Section 3A of Central Excise Act, 1944 (1 of 1944).

3. Sir, the application of deeming provision of production based on formula of determination of Annual Capacity of Production solely depending upon the capacity of the furnace installed as notified vide Notfn. No. 24/97-CE(NT) dated 25.7.97 would be extremely harsh upon us. Here it would be worthwhile to mention even the capacity of production does not mean the emergence of final product i.e. M.S. Ingots only. Capacity of furnace and emergence of products, therefore, includes M.S. Ingots, Scraps and Runner Risers etc.

Notfn. No. 49/97-CE dated 1st August, 1997 exempts such scraps from payment of duty. We have earlier apprised in our representation that actual production is dependent upon availability of raw materials, interrupted electric supply, labour, finance etc. All these facts, in the past have been hurdles to us and we foresee these hurdles are to continue in future also and we shall never be able to get the actual production on the basis of application of the formula as notified in the Notfn. No. 24/97-CE (NT) dated 25.7.97. We hope that your honour will be pleased to consider all the factors responsible for production and determine the ACP accordingly in terms of Sub-section (2) of Section 3A of Central Excise Act, 1944, taking into account our performance in the past.

4. We are, therefore, awaiting for the orders of your goodself and hope reasonable ACP will be determined and communicated to us without any delay.

Compounded levy scheme as notified did not provide for taking into account "availability of raw materials, uninterrupted power supply, labour, finance etc." while fixing annual capacity of production.

6. In the above stated facts and circumstances, it has to be held that the present appeal lacks legal basis. It is, accordingly, rejected.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Keshav Nilu Steels (P) Ltd. vs Cce Same Subject Excise Same Judge K Usha, N T C.N.B.