M/S Mahrishi Alloys P. Limited vs Commissioner Of C.Ex

Customs Appeal No.00075 of 2008 (Arising out of Order-in-appeal No.05/2007(T) CE, dated 2.8.2007 passed by the Commissioner (Appeals), Central Excise, Customs & S. Tax, Guntur. For approval and signature: Honble Mr. Justice G. Raghuram, President Honble Mr. B.S.V. Murthy, Member(Technical)

1. Whether Press Reporters 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

Yes

3. Whether their Lordship wish to see the fair copy of the Order?

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

Yes

M/s Mahrishi Alloys P. Limited ..Appellant(s)

Vs. Commissioner of C.Ex., Tirupati ..Respondent(s)

Appearance

Mr. N. Anand, Advocate for the appellant Mr. Geelani Barsha, A.R. for the respondent Coram:

Honble Mr. Justice G. Raghuram, President Honble Mr. B.S.V. Murthy, Member(Technical)

Date of Hearing: 25.5.2015 Date of decision:25.5.2015

FINAL ORDER No._______________________ [Order per: B.S.V. Murthy:]

The appellant is engaged in the manufacture of M.S. Ingots falling under CTH 72.04. During the relevant time to which the dispute relates to, the products which notified under Section 3A of the Central Excise Act, 1944 and the duty liability was based on annual capacity determined by the Commissioner. According to the provisions of Central Excise Rules, the Commissioner had determined the duty liability at Rs.4,16,667/- per month. While the annual capacity was determined under Rule 96ZO(3), as per Rule 96ZO(2), a manufacturer who does not produce ingots during any continuous period of not less than 7 days would be eligible for proportionate abatement subject to fulfilment of conditions and passing of order by the Commissioner.

2. In this case, during the period from 7.9.98 to 28.9.98 the appellant factory was closed and there was no production and they claimed abatement for the relevant period and did not pay tax.

3. This is the second round of litigation. The impugned order has been passed after remand by the Tribunal. The Tribunal had directed that there was no Commissioners order rejecting abatement in this case.

4. Ld. Advocate on behalf of the appellant submits that the abatement has been denied on the ground that the appellant did not make an application for abatement. It is his submission that there is no finding in the order that the appellant has not fulfilled the conditions to get abatement. The only ground taken is that no application was made. He submits that Rules do not require such application.

5. Ld. A.R. submits that the appellant was required to make an application and in the absence of an application,, the abatement denial is proper.

6. Ld. Counsel also relies on the decision of the Honble Gujarat High Court in the Krishna Processors vs. UOI reported in 2012 (280) ELT 186 (Guj.) to submit that proceeding could not have been concluded at all.

7. After hearing both sides and on going through the records, we find that in this case, the Rule 96ZO(2) reads as under:

Where a manufacturer does not produce the ingots and?(2) billets of non-alloy steel during any continuous period of not less than seven days and wishes to claim abatement under sub-section (3) of Section 3A of the Central Excise Act, 1944 the abatement will be allowed by an order passed by the Commissioner of Central Excise of such amount as may be specified in such order, subject to the fulfilment of the following conditions, namely:-

(a) the manufacturer shall inform in writing about the closure to the Assistant Commissioner of Central Excise, with a copy to the Superintendent of Central Excise, either prior to the date of closure or on the date of closure;

(b) the manufacturer shall intimate the reading of the electricity meter to the Assistant Commissioner of Central Excise with a copy to the Superintendent of Central Excise, immediately after the production in his factory is stopped along with the closing balance of stock of the ingots and billets of non-alloy steel;

(c) the manufacturer, when he starts production again, shall inform in writing about the starting of production to the Assistant Commissioner of C.E. , with a copy to the Superintendent of Central Excise, either prior to the date of starting production or on the date of starting production;

(d) the manufacturer shall on start of production again along with the closing balance of stock on restarting the factory, intimate the reading of the electricity meter to the Assistant Commissioner of Central Excise, with a copy to the Superintendent of Central Excise;

(e) the manufacturer shall while sending intimation under clause (c), declare that this factory remained closed for a continuous period starting from .hours on ..(date) to.hours on.(date).

From the Rule, it can be seen that Rule does not envisage any application to be made by the manufacturer or the assessee. In this case, the appellant had requested the Deputy Commissioner to adjudicate the matter after personal hearing and had also stated that they are eligible for abatement. The proper course to be adopted by the Deputy Commissioner was to refer the matter to Commissioner for consideration. When Rules do not require any application to be made, denial of abatement on that ground cannot be sustained.

8. Besides, we find that reliance by the ld. Counsel on the decision of the Honble Gujarat High Court is also appropriate. We find that Honble High Court in the case of Krishna Processors in paragraph 22 made the following observations:

22.?For the foregoing reasons, the petitions succeed and are accordingly allowed. Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 is held to be ultra vires Articles 14, 19(1)(g) and 265 of the Constitution of India. It is further held that after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules with effect from 1st March, 2001 no proceedings could have been initiated thereunder and after the omission of Section 3A of the Act with effect from 11th May, 2001, without any saving clause, no pending proceeding under the said rules which had not been concluded before the omission came into effect, could be concluded thereafter. The proceedings culminating into the impugned orders having been initiated/concluded after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules and Section 3A of the Act are, therefore, without any authority of law and as such, cannot be sustained. The impugned orders dated 9th November, 2001/1st January, 2002 (Special Civil Application No. 1984 of 2002), dated 31st December, 2003 (Special Civil Application No. 3637 of 2004) and dated 30th October, 2001 (Special Civil Application No. 6779 of 2003) are hereby quashed and set aside. Rule is made absolute accordingly in each of the petitions with no order as to costs.

Therefore, in this case, the proceeding should not have been continued since it is not legal to continue with the same.

9. In view of the above discussion, the appeal is allowed with consequential relief, if any.

( G. RAGHURAM ) PRESIDENT

scd/

(B.S.V. MURTHY) MEMBER (TECHNICAL)

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