Cce, Raipur vs Murli Rolling Mills

[Arising out of Order-in-Original No.22/Sec.3A/Commr/2009 dated 23.03.2009 passed by the Commissioner (Adjudication), Customs & Central Excise, Raipur]

For approval and signature:

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

1. Whether Press reporters may be allowed to see the

order for publication as per Rule 27 of the CESTAT

(Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the

CESTAT (Procedure) Rules, 1982 for publication in

any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy

of the Order?

4. Whether Order is to be circulated to the Departmental

authorities?

__________________________________________________

CCE, Raipur Appellant

Vs.

Murli Rolling Mills  Respondent

Present for the Appellant : Shri R.K.Mishra, DR

Present for the Respondent: Shri V.K. Puri, Advocate

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 02.06.2015

FINAL ORDER NO. 53896/2015

PER: S.K. MOHANTY

The instant appeal is filed by the Revenue against the order No.22/Sec. 3A/Commr/2009 dated 23.03.2009 passed by the Commissioner, Central Excise, Raipur (C.G.).

2. Brief facts of the case are that the respondent herein is engaged in the manufacture of Hot Rolled products of non-alloy steel, falling under Chapter Heading 72 of CETA-1985. Duty on the said hot rolled products is payable under Rule 96 ZP of the erstwhile Central Excise Rules 1944, which came into effect on 01.09.1997. The said rule specifies the products, which are required to discharge the duty liability on the basis of annual production capacity determined by the Commissioner. According to sub-rule (1) of Rule 96 ZP, a manufacturer of non-alloy steel hot rolled products is required to debit an amount, calculated at the rate of 400 per M.T. at the time of clearance of the specified products from his factory, in the account  current, maintained by him under rule 173 G of the erstwhile Central Excise Rules, 1944. Sub-rule (2) of the said rules stipulates that where a manufacturer does not produce the specified products during any continuous period of not less than 7 days and claim abatement under sub-section 3 of Section (3A) of the Central Excise Act, 1944, such abatement will be allowed by an order, passed by the Commissioner of Central Excise. Sub-rule (3) of the said Rule 96 ZP provides the option to be exercised by the manufacturer for payment of duty @ Rs.300/- per M.T. on the basis of Annual Capacity of production (ACP), as to be determined by the Commissioner. In the said sub-rule, there is no provision for allowing any abatement on account of closure of factory, which is provided only under sub-rule (2) of Rule 96 ZP as stated above.

3. In the present case, the factory of the respondent was closed during the period from 28.06.1997 to 12.10.1997. Before re-start of production, the respondent on 10.10.1997 exercised option to operate under Rule 96 ZP (3) and, accordingly, filed the application before the Jurisdictional Central Excise Authority.

4. Pending verification of the information furnished by the respondent, vis-`-vis determination of annual capacity of production, the Jurisdictional Commissioner of Central Excise vide letter dated 20.10.1997, determined the annual production capacity provisionally and called upon the respondent to pay duty of Rs.94,950/- by 10th of each month during the period 1997-1998. In the said letter, the Commissioner also informed the respondent that they can make representation against the provisional fixation of annual capacity of the mill within 10 days from the date of receipt of the communication. Pursuant to the interim order of the Commissioner, the respondent vide its letter dated 22.12.1997 addressed to the Commissioner, Central Excise, Raipur, interalia, stated that the rolling Mill was closed for the period 28.6.1997 to 12.10.1997 and the information regarding such closure had already been intimated to the Jurisdictional Range Superintendent. The submission of the respondent in the said letter was that since their factory was closed during the above period, the respondent was eligible for abatement as provided in sub-rule (2) of Rule 96ZP. In the said letter the respondent had also informed their intention to opt for the provisions under 96ZP (3) w.e.f. 13.10.1997 of the Rules. However, the representation of the respondent dated 22.12.1997 was not considered favourably and the jurisdictional Commissioner, Central Excise vide his letter dated 27.01.1998 informed that no evidences have been produced regarding closure of the mill, and as such, the request for abatement cannot be acceded to, and the respondent was asked to pay the duty, as determined, w.e.f. 1st September, 1997. The Commissioner further held that if the respondent fails to discharge the duty liability, then the same would be recoverable from the respondent as arrears of Revenue.

5. The provisional annual capacity was finalized by the Commissioner vide order dated 23.03.2009, wherein the annual capacity of production for the period 1997-98, 1998-99 and 1999-2000 was determined at Rs.3,798 MT, which was same as earlier determined in the provisional ACP. In the said order the duty liability for the period from 01.09.1997 to 09.10.1997 was fixed at Rs.1,62,325/- under Rule 96 ZP ( 1 & 2) of the erstwhile Central Excise Rules, 1944. However, the said duty liability was abated, in view of the fact that the factory of the respondent was closed during the above period, and the respondent opted to avail the scheme under Rule 96 ZP (3) w.e.f.10.10.1997. Feeling aggrieved with the abatement provided in the adjudication order (for short referred as impugned order) dated 23.03.2009, the Revenue- appellant has preferred the appeal before this Tribunal on the following grounds:-

(a) The Commissioner vide order dated 27.01.1998 since had directed the party to pay Central Excise duty amounting to Rs.94,950/- for each month starting from 01.09.1997, the Commissioner had become functus-officio and was precluded from again considering the matter, as has been done in the impugned order.

(b) The issue whether Central Excise duty amounting to Rs.94950/- is recoverable from the party from the month of September, 1997 has already been decided by the Commissioner (Appeals), Central Excise, Raipur. Thus, the administrative Commissioner is erred in re-adjudicating the issue and allowing abatement of duty payable for the period 01.09.1997 to 09.10.1997.

(c) As per the requirement of Rule 96 ZP (3), duty is required to be paid for each of the month from 1st September, 1997 to 31st March, 1998.

(d) Abatement for the period of closure was not admissible as the party (Respondent) was not a new unit and were registered under Central Excise prior to introduction of compounded levy w.e.f. September, 1997.

6. The ld. DR appearing for the Revenue-appellant reiterates the grounds of appeal and also submits that since the registration certificate has not been surrendered by the respondent, the duty liability is required to be discharged even during the closure of the unit. In this connection, he relies on the decision of the Tribunal in the case of Dhatapara Steel Industries v/s CCE, Nagpur reported in 2006 (201) ELT 150 (Tri. Mum.)

7. Shri V.K. Puri, ld. Advocate appearing for the respondent submits that the grounds of appeal in the appeal memorandum filed by Revenue are not legal and proper and the impugned order dated 23rd March, 2009 has been passed in conformity with the statutory provisions. With regard to the ground No.1, the submissions of the ld. Advocate is that the communication dated 27.01.1998 by the Commissioner cannot be construed as an order and as such the same is not appealable. In this context, he relies on the decision of this Bench of the Tribunal in the case of G.P. Jaiswal vs. Commissioner of Custom, Lucknow reported in 2008 (226) ELT 707 (Tri.  Del.). Thus, according to the ld. Advocate, in absence of an order passed under the statute, it cannot be said that Commissioner has become functus-officio and he cannot pass further order in determining the final ACP and subsequent determination of the duty liability. The submissions of the ld. Advocate with regard to the second grounds of appeal are that the Commissioner (Appeals) has only decided that he has jurisdiction to entertain the appeal of the appellant and regarding the merits no findings have been recorded in the order passed by him; and thus there is no error in the order dated 23.03.2009. As regards the third ground in the Revenues appeal, the submission of the ld. Advocate is that since the factory of the respondent was closed during the period from 28.06.1997 to 12.10.1997, and intimation to this effect was filed, and the respondent opted to operate under Rule 96ZP (3) only with effect from 10.10.1997, the respondent was not required to pay the duty in terms of Rule 97ZQ (3) of Central Excise Rules, 1944. With regard to the last ground of the appellant, the submissions of the Advocate are that the benefit of sub-rule (2) of Rule 96 ZP is available since opting for the scheme under sub-rule (3) has been exercised w.e.f. 10.10.1997 and as such, no duty is payable for the period, prior to the date of exercising of such option.

8. I have heard the ld. Counsel for the parties and perused the records.

9. On perusal of the letter dated 27.01.1998 of the Commissioner addressed to the respondent, it reveals that it is a simple letter, wherein the representation of the assessee regarding annual capacity and duty liability of hot re-rolling mills has been disposed of. The said communication issued by the Commissioner pending final determination of ACP, cannot be considered as an adjudication order. Since the said letter of the Commissioner cannot be construed to be an order, the adjudicating authority does not become functus-officio and. the matter can be adjudicated based on the documentary evidences and representation furnished by the respondent manufacturer subsequently for final determination of ACP.

10. With regard to the ground No.2 in the appeal memorandum that the issue relating to recovery of Central Excise Duty amounting to Rs.94,950/- has already been decided by the Commissioner (Appeals) Central Excise, Raipur, I find that the issue before the Commissioner (Appeals) was entirely different from the issue adjudicated by the jurisdictional Commissioner by the impugned order while fixing the ACP finally. Hence the order passed by the Commissioner (Appeals) will not have any application/nexus as far as the impugned order is concerned.

11. With regard to the grounds of appeal No. 3 & 4 raised by the Revenue, it is clearly borne out from the records that the respondent had intimated the option for availing of the Scheme on 10.10.1997 under Rule 96ZP (3) of Central Excise Rules, 1944. Therefore, duty is payable under the said sub-rule (3) only with effect from 10.10.1997. In respect of the period 28.06.1997 to 12.10.1997 as the factory was closed, the respondent is eligible for abatement under sub-rule (2) of Rule 96 ZP, as rightly held by the Commissioner in the impugned order.

12. In view of above, I do not find any infirmity in the impugned order. Thus, the appeal filed by the Revenue is dismissed.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY)

MEMBER (JUDICIAL)

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