Custom, Excise & Service Tax Tribunal
M/S M.P. Steel Process vs Cce, Raipur on 15 June, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
Excise Appeal No. 2781 of 2009
(Arising out of Order-in-Original No. 25/Sec.3A/Commr/2009 dated 26.03.2009 passed by the Commissioner of Central Excise, Raipur).
DATE OF HEARING : 15.06.2010
DATE OF DECISION : 15.06.2010
FOR APPROVAL AND SIGNATURE :
HONBLE MR. JUSTICE R.M.S. KHANDEPARKAR, PRESIDENT
HONBLE MR. RAKESH KUMAR, 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 ?
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?
M/s M.P. Steel Process . Appellants
(Rep by Ms. A. Nair, Adv.)
VERSUS
CCE, Raipur . Respondent
(Rep. by Sh. Virender Choudhary, DR)
CORAM : HONBLE MR. JUSTICE RMS KHANDEPARKAR, PRESIDENT
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
ORAL ORDER NO.___________________________
PER JUSTICE R.M.S. KHANDEPARKAR :
The appeal is taken up for hearing in terms of the order passed today in Stay Application No. E/2865 of 2009.
2. This appeal arises from the order dated 26th March, 2009 passed by the Commissioner, Raipur, whereby the annual capacity of the hot re-rolling steel mill of the appellants has been finalized for the year 1997-98, 1998-99 and 1999-2000 while fixing the duty liability accordingly.
3. The appellants were the manufacturer of Hot Rolled Products of Non-Alloy Steel classified under Chapter 72 to the Schedule of the Central Excise Tariff Act, 1985. The provisional capacity of the mill was determined under order dated 18/28.12.1998 to be 1083 MTs and the duty liability was fixed at Rs. 13,538/- per month from 1st April, 1998. For the purpose of finalization of the said provisional order as well as the earlier orders passed in that regard, notices were issued to the appellants. However, there was no response from the appellants and consequently the Commissioner proceeded ex parte to decide the said capacity as well as the duty liability, and accordingly under impugned order after taking into consideration the materials on record decided the same. The capacity was confirmed at 1083 MTs and duty liability was fixed at Rs. 13,538/- per month from September 1997 to March 2000 in terms of the provisions of law comprised under Rule 96ZP(3) of the Central Excise Rules, 1944. It was also held that, in case of non-payment or short payment of duty the same would carry interest @ 18% per annum.
4. The appellants have sought to challenge the impugned order on two grounds. Firstly, that the finalization of the assessment being for the years 1997 to 2000 should have been done within the reasonable time and the reasonable time cannot extend beyond five years. Considering that the order has been passed in the year 2009 in relation to the period from 1997 to 2000, the same is to be held as having been passed beyond the period permissible for exercise of jurisdiction in that regard. Reliance is placed in the decision of the Punjab & Haryana High Court in the matter of M/s Bhawani Castings (P) Ltd., Mandi Gobindgarh vs CCE, Chandigarh, in CEA No. 108 of 2009 delivered on 21st April, 2010. Secondly, that the appellants mill has not been in existence since 1999 as it was permanently closed from June, 1999, and in that regard attention is drawn to Rule 3(4) of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 and the decision of the Patna High Court in the matter of Balajee Ingot India Pvt. Ltd. vs Union of India, reported in 2004 (167) ELT 389 (Pat.) and the decision of the Tribunal in the matter of Ambica Steel Rolling Mills vs CCE, Vadodara, reported in 2009 (245) ELT 519.
5. As regards the first ground of challenge, the learned advocate for the appellants fairly conceded that there is no provision either in the Central Excise Rules or, in particular, under the provisions dealing with the Compounded Levy Scheme prescribing any limitation for finalizing the provisional order passed fixing the annual capacity and duty liability. She, however, submitted that, in such cases the authority has to exercise the jurisdiction within the reasonable period. Reliance was placed in that regard in the decision of the Punjab & Haryana High Court in the matter of M/s Bhawani Castings (P) Ltd. (supra). As regards the second ground of challenge, the learned advocate for the appellants submitted that, Rule 3(4) of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 clearly required the authority to decide the proceedings expeditiously. She further submitted that, the rules do not relate to a situation where very existence of the factory stands extinguished. In such cases, the Tribunal has held that, absence of provision in that regard cannot result in denial of necessary abatement facility to the manufacturer. Reliance is placed in that regard in the decision of the Tribunal in the matter of M/s Ambica Steel Rolling Mills (supra).
6. The learned DR, on the other hand, submitted that, the impugned order essentially relates to finalization of the annual capacity and the corresponding duty liability, and in this regard the appellants have not challenged the same on any of the grounds. The only grievance which the appellants have made relates to the issue of abatement and the said issue was not raised before the Commissioner nor the Commissioner was seized with the said issue in the matter in hand and, therefore, the appeal cannot be decided in relation to the issue which never arose before the adjudicating authority.
7. As far as the first ground of challenge is concerned, it cannot be disputed that, bearing in mind the provisions of law comprised under Rule 3(4) of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997, the Commissioner is expected to determine the annual capacity as expeditiously as possible on completion of the verification of the declaration filed by the party. However, there is no limitation prescribed for the same. As rightly pointed out by the learned advocate for the appellants, it cannot be disputed that the same exercise is to be done within the reasonable period of time. Having so observed, it is also to be noted that, the exercise by the concerned authority in that regard would also require necessary assistance and co-operation by the manufacturer. Determination of capacity has to be done on the basis of the materials to be produced by the manufacturer satisfying its claim in the declaration and the assessment of such materials by the authority deciding the same. In other words, an assessee cannot accuse the adjudicating authority of undue delay in deciding the matter unless he performs his obligation in respect of necessary co-operation to be rendered to the authority in furnishing of the materials necessary to determine the capacity. Failure on the part of the assessee in that regard cannot be basis to interfere in the order passed by the authority finalizing the provisional assessment in that regard even beyond the period of five years. Whether in a particular case the authority has unreasonably delayed the finalization of the process or not, would depend upon the facts of each case.
8. In the case in hand, the impugned order clearly discloses that, the provisional assessment orders were being passed from time to time since 1997 to 1998. Para 8.1 of the impugned order discloses that, in order to finalize the provisional order, opportunities were given to the appellants of personal hearing. However, the appellants failed to appear before the authority. There was not even communication by the appellants to the authority about any reason for their absence. In those circumstances, the authority proceeded to dispose of the matter ex parte on the basis of materials available on record. While finalizing the provisional assessment, the authority confirmed the capacity as was provisionally decided under order dated 1st April, 1998 and also confirmed the duty liability fixed thereunder. In such circumstances, it cannot be said that the authority did not decide the matter within the reasonable period of time.
9. The decision of the Punjab & Haryana High Court in the matter of M/s Bhawani Castings (P) Ltd. (supra) has no application to the matter in hand. Therein the question of law which arose for consideration was, whether the Tribunal was right in holding that the proceedings for imposition of penalty could have been initiated even after the period of five years. In that case the duty amount along with interest was paid in March, 2000. However, the show cause notice demanding the penalty was issued as late as on 04th December, 2006 i.e. after a gap of more than six years. Taking note of the said fact, the Punjab & Haryana High Court held that, where no statutory period has been prescribed for initiating proceedings for imposition of penalty under Section 96 ZO(3), then the proceedings should be initiated within a period of five years and not later than that. Clearly the decision is distinguishable on facts as well as on the point of law.
10. As regards the second ground of challenge, there is no dispute that the authority below was not seized with the issue of abatement claim by the appellants. The impugned order merely relates to finalization of the provisional order relating to determination of the annual capacity and corresponding duty liability. Admittedly, at no point of time, the appellants had placed before the authority that the factory had closed since June, 1999. As rightly submitted by the learned DR, the appellate authority cannot interfere in the order of the original authority on the materials extraneous to the records and those were not placed before the original authority while deciding the matter. The correctness of the findings arrived at by the adjudicating authority is to be tested on the basis of materials which were available before the adjudicating authority at the time of delivering the decision under challenge. Since the alleged fact of closure of the factory was not placed before the adjudicating authority while passing the impugned order, it will be highly improper to interfere in the impugned order on the said ground.
11. The decision of the Tribunal in the matter of M/s Ambica Steel Rolling Mills (supra) is in a case where abatement claim was rejected. It was not in relation to the finalization of the provisional assessment. Similar is the decision of the Patna High Court in the matter of M/s Balajee Ingot India Pvt. (supra). Incidentally, the learned advocate for the appellants has also fairly submitted that, the said decision is under challenge before the Apex Court and the appeal in that regard has been admitted by the Apex Court.
12. It will be too pre-mature for this Tribunal to deal with the issue regarding the abatement which is sought to be raised by the appellants in the present appeal. It will be primarily for the lower authority to deal with the said issue at the original stage. In the absence of any adjudication in that regard, it would be pre-mature for the Tribunal to express any opinion on the said issue.
13. For the reasons stated above, therefore, leaving the issue regarding the claim of abatement open, the appeal is hereby dismissed.
(JUSTICE R.M.S. KHANDEPARKAR) PRESIDENT (RAKESH KUMAR) MEMBER (TECHNICAL) Golay 8