Full Judgment
1.9.97and, in respect of the additional furnace, they filed declaration dated 15.4.99. Under the provisions of Rule 96 ZO(3) of the Central Excise Rules, 1944 read with Sub-section (3) of Section 3A of the Central Excise Act, the appellants were liable to pay duty @ Rs. 5 lakhs p.m. in respect of the 3 M.T. capacity furnace. The total duty liability in respect of this furnace for the period of dispute (6 months) was accordingly Rs. 30-lakhs. On a pro rata basis, the total duty liability in respect of the 1 M.T. capacity furnace for the relevant period worked out to Rs. 3,72,223. As the appellants failed to discharge their duty liability for the said period of six months, the department issued show-cause notice to them demanding the total duty amount of Rs. 33,72,223 (alongwith interest thereon) as also proposing to impose penalty on them for contravention of Rule 96ZO(3). The party contested the show-cause notice on various grounds. The main ground raised by them was that their actual annual production was far below the annual capacity of production determined by the Commissioner and that the show-cause notice should not have been issued till their application to the Commissioner for refund of the "excess duty paid by them on actual production basis" was disposed of. The original authority confirmed the above demand of duty with interest and also imposed on them a penalty of Rs. 33,72,223 under Rule 96ZO(3) of the Central Excise Rules, 1944. The appeal preferred by the aggrieved party to the Commissioner (Appeals) did not succeed. The lower appellate authority, following the Supreme Court's judgment in the cases of CCE v. Venus Castings (P) Ltd., 2003 (69) ECC 1 (SC) : 2000 (117) ELT 273 (SC), and Union of India v. Supreme Steels and General Mills, 2001 (75) ECC 225 (SC) : 2001 (133) ELT 513 (SC), held that as the appellants had opted for full and final payment of central excise duty under the provisions of Rule 96ZO(3) and had duly filed declarations of furnace capacity, they were liable to discharge duty liability in terms of Rule 96ZO(3) and had no right to claim that they could pay duty on the basis of actual production in terms of Sub-section (4) of Section 3(A) of the Act. Hence, the present appeal.
3. Ld. Counsel for the appellants submitted that, as early as on 31.3.98, they had opted out of the Compounded Levy Scheme and proposed to pay Central Excise duty on the basis of actual production under Sub-section (4) of Section 3A of the Central Excise Act. The total amount of duty paid till that time under the above scheme was far in excess of the amount of duty payable on the basis of actual production and, therefore, a refund claim was filed with the department for refund of the excess duty. It was during the pendency of the said refund claim that the show-cause notice in question was issued. In a reminder dated 11.8.99, the appellants had requested the Commissioner of Central Excise for a decision on their refund application. In that letter, they had also pleaded for redetermination of duty liability in terms of Sub-sections (4) & (5) of Section 3A ibid. These pleas were also ignored by the Commissioner. Pending the refund claim and the connected requests of the appellants, the department should not have issued the subject show-cause notice. Referring to the impugned order, Ld. Counsel submitted that the Ld. Commissioner (Appeals) had misinterpreted the Supreme Court's decision in Venus Castings (supra) and Supreme Steels and General Mills (supra). According to the counsel, it was permissible for the appellants to opt out of the Compounded Levy Scheme prospectively.
4. Ld. SDR contested these arguments by submitting that the appellants, in fact, had not absolutely opted out of the Compounded Levy Scheme and were not entitled to the benefit of Sub-section (4) of Section 3 A of the Act. The DR pressed into service the ruling of the Apex Court in the cases of Venus Castings (supra) and Supreme Steels and General Mills (supra).
5. We have carefully considered the submissions. It is not in dispute that the appellants had filed the necessary declarations for the purpose of determination of their annual capacity of production [ACP] under the Compounded Levy Scheme and that the Commissioner of Central Excise determined their ACP under the Induction Furnace Annual Capacity Determination Rules, 1997. It is also not in dispute that they were discharging duty liability on the basis of such ACP. Apparently, by letter dated 31.3.98 addressed to the Asstt. Commissioner of Central Excise, the appellants raised certain objections against the ACP determination. Further, they declared as under: "We shall, therefore, make the payment of excise duty under Section 3(4) of the Central Excise Duty Act, 1944 till the matter is decided by Govt. of India and this is a very important demand of the trade and till that time we shall continue paying duty under protest." 6. Subsequently also, they sent letters to the Commissioner. In one of such letters, they raised a claim for refund of what they considered as excess duty. The department, however, continued to treat the appellants as a unit covered under the Compounded Levy Scheme and, accordingly, issued a show-cause notice for recovering the amount of duty defaulted under that scheme. The question before us is whether it was open to the appellants to claim the benefit of Sub-section (4) of Section 3A of the Act legitimately in the facts and circumstances of this case. We have already extracted the operative part of the appellants' letter dated 31.3.98. What they had stated in the said letter was that they shall pay central excise duty under Sub-section (4) of Section 3A of the Central Excise Act "till the matter was decided by the Government and that, till such time, they shall continue paying duty under protest".
We are unable to accept this statement as an act of opting out of the Compounded Levy Scheme. On the other hand, in this case, it is an admitted fact that the appellants had opted for full and final discharge of their duty liability for the manufacture of ingots under Section 3A of the Central Excise Act in terms of Sub-rule (3) of Rule 96ZO. Having thus opted to avail of the procedure under Sub-rule (3) of Rule 96ZO, the appellants were liable to pay duty of excise in accordance with the said Sub-rule (3). It was clearly held by the Apex Court in Venus Castings (supra) that the two procedures viz. one provided under Section 3A(4) of the Central Excise Act and the other provided under Rule 96ZO(3) of the Central Excise Rules were alternative procedures and an assessee could opt for only one of these.
Once they so opted, they cannot claim the benefit of the other. This legal position has been reaffirmed by the Apex Court in the case of Supreme Steels and General Mills (supra).
7. In view of the above settled position, we do not find any merit in the present appeal and we dismiss the same.