M/S Shagun Processors Pvt Ltd vs Commissioners Of Central Excise

[ Arising out of OIO-55/DEM/2010 dtd 31.3.2011 passed by Commissioner of Central Excise, Customs and Service Tax-SURAT-I ]

M/s Shagun Processors Pvt Ltd - Appellant(s)

Vs

Commissioners of Central Excise, Customs and Service Tax-SURAT-I - Respondent (s)

Represented by For Assessee : Shri Ashok Singh, Advocate For Revenue : Shri J Nair, Authorised Representative

For approval and signature :

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

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, Honble Member (Technical)

Date of Hearing / Decision : 21/10/2015

ORDER No. A/11565 / 2015 dtd 21/10/2015

Per : Mr.P.M. Saleem,

The appellant herein M/s Shagun Processors, has filed this appeal before us, aggrieved by the Order in Original of Commissioner Central Excise & Customs, Surat, dtd 31.03.2011. The issue involved is whether Central Excise duty under compounded levy scheme for the period from September 2000 to January 2001 demanded by the impugned Show Cause Notice dated 04.10.2001 is sustainable or not. The appellant was availing the benefit of notification No 42/98 CE(NT) as amended, and demand was made under Rule 96ZQ Central Excise Rules, 1944.

2. Heard both sides. It is observed from the OIO that the impugned show cause notice was issued on 4.10.2001. The impugned Order in Original dtd 31.03.2011 confirmed the Central Excise duty demanded under the compounded levy scheme for the months October 2000 to January 2001. It is observed that the Honble Madras High Court in the case of Beauty Dyers vs Union of India -2004(166)ELT.27 (Mad) has struck down Rule 3 of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998.For better appreciation, the relevant portion of the said decision is reproduced below:

 13.As rightly? submitted by learned Counsel all chambers irrespective of the nature, age and their capacity cannot be treated equally for the purpose of fixing the annual capacity of production, as the same has been done under Notification No. 42/1998. The rules framed under Notification No. 42/1998 is not having acceptable method to arrive at the capacity of production, which is absolutely necessary to levy and collect duty of excise under Section 3A of the Act. So, the said rules cannot be adopted for determination of excise duty as they cannot level the correct capacity of production of the factory for the purpose of levying excise duty. So, the Rule 3 of the rules issued in the Notification No. 42/1998 cannot be sustained as they are ultra vires Section 3A of the Act.

3. Further, the Honble High Court of Gujarat in the case of Krishna Processors vs Union of India - 2012(280)ELT.186 (Guj) held as follows:

 18.3?In the light of the aforesaid discussion, this court is of the view that upon the omission of Rules 96ZQ, 96ZP and 96ZO from the statute book on 1st March, 2001, no action could thereafter have been initiated thereunder. However, in view of the fact that the notification dated 1st March, 2001 amends the Central Excise Rules except as respects things done or omitted to be done by such amendment, the pending proceedings already initiated under Rules 96ZQ, 96ZO and 96ZP could continue. Whereas after the omission of Section 3A of the Act, no action whatsoever could be initiated, continued or taken under the said provision or the rules framed thereunder or framed in respect thereof. In the circumstances, the contention raised on behalf of the petitioners that as vide clause 7 of notification dated 1st March, 2001, Rules 96ZO, 96ZP and 96ZQ were omitted without any saving clause and Section 3A was also omitted vide Section 121 of the Finance Act, 2001 on 11th May, 2001 without any saving clause, all proceedings which were pending as on 11th May, 2001 as regards Rules 96ZO, 96ZP and 96ZQ would thereafter automatically lapse, merits acceptance. Consequently, no orders could have been passed against the petitioners under the said provisions if the actions against the petitioners were not concluded at the time of omission of Section 3A of the Act.

4. In the instant case, the show cause notice itself is issued only on 4.10.2011 whereas Rule 96ZG of Central Excise Rules 1944 was omitted on 01.03.2001, and Section 3A of Central Excise Act 1944 itself was also omitted on 11th May, 2001 without any saving clause. Further, Rule 3 of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 framed under notification No. 42/98 C.E.(NT) issued under Section 3A of Central Excise Act, 1944 was also held as ultra vires. In view of the same, it is found that the impugned order cannot be sustained.

5. The appeal is allowed.

(Dictated and pronounced in the open Court)

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

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