M/S. Kumar Cotton Mills Pvt. Limited vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIO-05/COMMISSIONER/2007 dated 15.06.2007, passed by Commissioner (Appeals) Central Excise & Service Tax, Ahmedabad)

M/s. Kumar Cotton Mills Pvt. Limited : Appellant (s) Shri Pravinbhai D. Patel

VERSUS

Commissioner of Central Excise & S.T., Ahmedabad : Respondent (s)

Represented by :

For Appellant (s) : Shri Paritosh Gupta, Advocate

For Respondent (s) : Shri K. Sivakumar, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

Date of Hearing / Decision : 12.06.2015

ORDER No. A/10792-10793/2015 Dated 12.06.2015

Per : Mr. P.K. Das;

The appellants are engaged in the processing of fabrics falling under chapter 52, 54 and 55 of the schedule to the CETA. They discharged Central Excise duty on the basis of Annual Production Capacity determined under Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 issued under Section 3A of the Central Excise Act, 1944, by Notification No. 42/1998-CE (NT) dated 10.12.1998, as amended.

2. There was a dispute regarding the number of chambers installed in the factory premises of the appellant and fixation of Annual Production Capacity. A show cause notice dated 29.6.1999 was issued proposing demand of differential duty alongwith interest and to impose penalty. By adjudication order dated 30.06.2000, the adjudicating authority confirmed the demand of duty alongwith interest.

3. By Notification No. 06/2001-CE (NT) dated 01.3.2001, Rule 96ZQ of the erstwhile Central Excise Rules was omitted, without any saving clause. By order dated 09.08.2006, the Tribunal set-aside the adjudication order and remanded the matter to adjudicating authority for fresh adjudication. By the impugned order, in de-novo proceedings, the adjudicating authority confirmed the demand of duty of Rs. 13,83,583/- alongwith interest and imposed penalties against the appellant Company and its Director.

3. After hearing both the sides and on perusal of the records, we find that the issue is no more res-integra in view of the decision of the Honble Gujarat High Court, which has been followed by the Tribunal in various decisions as under:-

(a) Krishna Processors vs. UOI  2012 (280) ELT 186 (Guj.)

(b) CCE, Jaipur vs. Alwar Processors Pvt. Limited  2014 (308) ELT 720 (Tri. Del.)

(c) Mahamaya Steel Industries Limited vs. CCE, Raipur  2104 (307) ELT 356 (Tri. Del.)

4. The learned Authorized Representative on behalf of the Revenue reiterates the findings of the adjudicating authority. He submits that in the present case, the proceedings were initiated before omission of Rule 96ZQ of the erstwhile Rules. It has been submitted that the impugned order was passed in continuation of the proceedings before omission of the said Rule and therefore, the decision of the Honble Gujarat High Court and Tribunal would not be applicable in this case.

5. We are unable to accept the contention of the learned Authorised Representative for the Revenue. We find that the Tribunal in the case of CCE, Jaipur vs. Alwar Processing  2014 (308) ELT 720 (Tri. Del.), on the identical issue, dismissed the appeal filed by the Revenue. The relevant portion of the said decision is reproduced below:-

6. Though the show cause notices for duty demand of Rs. 45,55,061/- had been issued during the period prior to omission of Rule 96ZQ i.e. prior to 1-3-2001 and these show cause notices had initially been adjudicated during the period prior to 1-3-2001, on appeal being filed to the Commissioner (Appeals), vide appellate order dated 28-3-200l of the Commissioner (Appeals), the Asstt. Commissioners order was set aside and the matter was remanded to the original adjudicating authority for de novo adjudication for quantification of duty demand for period from 28-2-1999 to 5-11-1999 and the de novo adjudication proceedings were completed only in 2004 long after omission of Section 3A w.e.f., 11-5-2001 and omissions of Rule 96ZQ w.e.f. 1-3-2001 without saving clause. The point of dispute is as to whether the proceedings initiated before 1-3-2001 would survive after omission of Rule 96ZQ without saving clause w.e.f. 1-3-2001 and omission of Section 3A without serving clause w.e.f. 11-5-2001. We find that this issue was considered by the Honble Gujarat High Court in case of Krishna Processors v. Union of India (supra), wherein Honble High Court considered the following issues :-

Whether in view of the omission of Rule 96ZQ of the Rules?(i) with effect from 1st March, 2001, the adjudicating authority could thereafter have initiated action for breach thereof by issuance of show cause notice and/or could have continued with the proceedings initiated but not concluded prior thereto?

Whether any obligation or liability incurred under Section?(ii) 3A of the Act is saved by Section 6 of the General Clauses Act and whether after the omission of Section 3A of the Act with effect from 11th May, 2001 proceedings initiated under the Rules 96ZQ, 96ZP and 96ZO of the Rules would survive?

Whether Section 38A of the Act saves all obligations and?(iii) liabilities incurred under Rule 96ZQ of the Rules? If yes, whether the said position would prevail even after the omission of Section 3A of the Act?

7. The Honble High Court relying upon the judgments in the case of Rayala Corporation Pvt. Ltd. reported in (1969) 2 SCC 412 and subsequent judgment of the Apex Court in the case of Kolhapur Cane Sugar Works Ltd. reported in 2000 (119) E.L.T. 257 (S.C.) concluded that no proceedings could have been initiated under the omitted Rule 96ZQ after omission of Section 3A with effect from 11-5-2001 in absence of any saving clause. The Court further held that all proceedings which were pending as on 11-5-2001, even if initiated prior to omission of Rule 96ZQ would thereafter automatically lapse and no order could be passed if they were not concluded at the time of omission of Section 3A with effect from 11-5-2001. In this judgment, the Honble High Court has also considered the judgment of Punjab & Haryana High Court in the case of Shree Bhagwati Steel Rolling Mills v. CCE, Chandigarh reported in 2007 (207) E.L.T. 58 (P & H) and expressed its disagreement. In view of the above judgment of the Honble Gujarat High Court, which is based on the judgment of the Apex Court in the case of Rayala Corporation Ltd. (supra) and Kolhapur Cane Sugar Works Ltd. (supra), after omission of Rule 96ZQ with effect from 01-3-2001 and omission of Section 3A of the Act without saving clause with effect from 11-5-2007, the proceedings initiated prior to omission which had not been concluded as on 11-5-2001 would lapse. In this case, though, initially the show cause notice issued prior to 1-3-2001 had been adjudicated by the Asstt. Commissioner, the Commissioner (Appeals) had set aside the orders and had remanded the matter for part of the period of dispute to the Asstt. Commissioner for de novo adjudication and de novo proceedings were concluded in 2004, long after omission of Rule 96ZQ with effect from 1-3-2001 and Section 3A with effect from 11-5-2001 without any serving clause and therefore the same would lapse. In view of this, we do not find any merit in the Revenues appeal. The same is dismissed.

6. We find that the facts of the present case are squarely covered by the decision of Tribunal in the case of Alwar Processing Pvt. Limited (supra). It is noted that the Tribunal has followed the decision of the Honble Gujarat High Court in the case of Krishna Processors (supra). In view of that, the impugned order cannot be sustained. Accordingly, it is set-aside and appeals are allowed.

(Dictated and pronounced in the Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial) ..KL

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