Prem Khalsa Iron And Steel Mills vs Cce Chandigarh

Appellant are engaged in manufacture of iron and steel bars by hot the re-rolling mills. The period of dispute is from September, 1997 to January, 1999. During the period of dispute, the appellant, in accordance with the provisions of section 3A of Central Excise Act, 1944 read with Rule 96ZP and of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 (hereinafter referred to as HRSMAC Rules) were discharging the duty liability on the basis of their monthly duty liability fixed based on their annual capacity of production determined in accordance with the formula prescribed in the HRSMAC Rules. In this case, during the period of dispute, the appellant had changed the parameters and on the basis of the changed parameters claimed lower capacity of production and lower duty liability. The Commissioner, however, by the impugned order dated 27/3/2006, applying Rule 5 of the HRSMAC Rules, determined their annual capacity of production and monthly duty liability based on the annual production during 1996-1997, i.e., 78,36.13 MT per annum. Against this order of the Commissioner, this appeal has been field.

2. Heard both sides.

3. In this case, Sh. Sudhir Malhotra, Advocate, ld. Counsel for the appellant, pleaded that though the issue involved in this case stands decided against the appellant by the Apex Courts judgment in the case of CCE-Chandigarh Vs. Duaba Still Rolling mills  2011 (269) ELT 298 SC, in view of the judgment of Honble Gujarat High Court in the case of Krishna Processors Vs. Union of India reported in 2012 (280) ELT 186 (Guj), no proceedings for recovery of duty or penalty can be initiated against the appellant.

4. Sh. R.K. Grover, ld. DR, while pleading that the issue involved in this case has been decided against the appellant by the Apex Courts judgment in the case of Doaba Steel Rolling Mills (supra) and that the duty liability has to be determined on the basis of the annual capacity of production as determined by the Commissioner in the impugned order stated that the appellants plea that no proceedings for recovery of duty and penalty, if any, can be initiated against the appellant, is not correct, as Honble Madaras High Court in the case of Triveni Alloys Ltd. vs. CESTAT, Chennai reported in 2014 (306) ELT 617 (Mad.) after discussing the judgment of Honble Gujarat High Court in the case of Krishna Processors Vs. Union of India, (supra) has taken a contrary view. He also mentioned judgment of Honble Punjab & Haryana High Court in the case of Shri Bhagwati Steel Rolling Mills Vs. Commissioner reported in 2007 (207) ELT 58 Punjab wherein the same view has been taken and this judgment being the judgment of the jurisdictional High Court, has to be followed and accordingly, even after the omission of section 3A and Rule 96ZP without saving clause, the proceedings for recovery of duty can be initiated.

5. We have considered the submissions from both the sides and perused the records. Since the issue regarding application of Rule 5 of HRSMAC Rules for determination of annual capacity of production by the appellant unit based on their annual production- 1996-1997 stands decided by the Apex Court against the appellant, the impugned order determining the annual capacity of production of the appellant unit has to be upheld. However, the impugned order passed by the Commissioner only determines the annual capacity of the production during the period of dispute and as such there is no duty demand for any duty which was short paid by the assessee or imposition of any penalty. It is also not known as to whether the show cause notices issued have been adjudicated or not. The duty liability however, has to be determined in accordance with the Commissioners order which has been upheld. The question as to whether the proceedings initiated by the issue of show cause notice, survive after the omission of section 3A of Central Excise Act, 1944 and Rule 96ZP cannot be gone into this appeal, as the Commissioners Order simply determines the annual capacity of production and has not confirmed any duty demand against the appellant. The appeal is, therefore, dismissed.

S.K. Mohanty Rakesh Kumar

Member (Judicial) Member (Technical)

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