Custom, Excise & Service Tax Tribunal
Bansal Iron & Steel Rolling Mills vs Cce & S.T., Chandigarh-I on 21 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
Excise Appeal No.E/3242/2012 [Ex. DB]
Excise Appeal No.E/60785/2013 [Ex. DB]
Excise Appeal No.E/50016/2014[Ex. DB]
Excise Appeal No.E/50017/2014[Ex. DB]
[Arising out of Order-in-Original issued under C.No.IV(16)Hqrs./TRC/Compounded Levy/11/2013/8405 dated 20.12.2013 passed by the Commissioner, Central Excise, Chandigarh].
For approval and signature:
Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr. R.K.Singh, Member (Technical)
1. Whether Press reporters may be allowed to see the No
order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy seen
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
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Excise Appeal No.E/60785/2013 [Ex. DB]
Bansal Iron & Steel Rolling Mills Appellant
Vs.
CCE & S.T., Chandigarh-I Respondent
Excise Appeal No.E/3242/2012[Ex. DB] CCE & S.T., Chandigarh-I Appellant Vs. M/s. Dhiman Industries Respondent Excise Appeal No.E/50016/2014[Ex. DB] King Steel Rolling Mills Appellant Vs. CCE & S.T., Chandigarh-I Respondent Excise Appeal No.E/50017/2014[Ex. DB] Quality Steels Appellant Vs. CCE & S.T., Chandigarh-I Respondent Present for the Appellant : Shri S.Malhotra, Advocate Shri A. S. Hasija, Advocate Present for the Respondent: Shri Yashpal Sharma, DR Ms. Sweta Bector, DR Coram:Honble Mrs. Archana Wadhwa, Member (Judicial) Honble Mr. R.K.Singh, Member (Technical) Date of Hearing/Decision: 21.08.2014 Final ORDER NO.53362-53365/2014 DATED: 21.08.2014 PER: ARCHANA WADHWA All the 4 appeals, one filed by the Revenue and the other by the assessee are being taken up together, as the issue involved is identical in all of them. All the assessees are engaged in the manufacture of re-rolling products. The dispute originally originated in respect of determination of annual capacity of production of the said units. On the appellants request, as a consequence of change in parameters, there was subsequent reduction in annual capacity of production of all the units. A dispute arose as to whether in such a situation, Rule 5 of Hot Rerolling Steel Mill Annual Capacity Determination Rules 1997 would apply or the assessees are required to discharge their duty liability in respect of the reduced annual capacity. The said dispute travelled up to Tribunal, who vide their Final Order No.821/2001/DB dated 5th October, 2001, in the case of Dhiman Industries, set aside the impugned order of the lower authority and remanded the matter to the Commissioner for fresh decision by observing that in the light of Larger Bench decision of the Tribunal in the case of Sawanmal Shibumal reported in 2001 (127) ELT 46, Rule 5 would not apply. Identical orders were passed in respect of the other assessees.
2. The said order of Tribunal was put to challenge by the Revenue before the Honble High Court of Punjab and Haryana, who rejected the Revenues appeal. Subsequently, the matter was taken up by the Revenue before Honble Supreme Court, who reversed the orders of the Tribunal, as confirmed by Honble High Court of Punjab & Haryana. Consequently, all the appellants became liable to pay the differential duties. The same were deposited by the units subsequent to the order of the Supreme Court.
3. The dispute in the present appeals relate to imposition of penalties in terms of the Provisions of Rule 96 ZP of the said Rules as also for confirmation of interest in terms of the Provisions of Rule 96 ZP read with Section 11AA. It is seen that the assessees Jurisdictional Central Excise Authorities passed detention notice orders for imposition of penalty to the extent of 100% of the deferential duty as also for confirmation of interest. The said so-called orders were represented by the assessees before their Jurisdictional Commissioner. The Commissioner vide his order dated 12.04.2012 in the case of Dhiman Industries held that no interest is leviable and no penalty is liable to be imposed. The said order of the Commissioner is impugned by the Revenue.
4. In all other cases the Assistant Commissioner directed the assessees to deposit the interest as well as penalty inasmuch as their representation before the Commissioner has not been accepted by him. The said orders of the Assistant Commissioner are challenged before us.
5. On being questioned, as to how the appeals have been filed before Tribunal against communication of Asstt. Commissioner, ld. Advocate appearing for the appellant clarifies that it is not the decision of the Asstt. Commissioner himself, but vide the said communication he is only communicating the decision of the Commissioner. As such, as per the law declared by the Tribunal in the case of Bhagwati Gases Ltd. vs. CCE, Jaipur-I reported in 2008 (226) ELT 468 (Tri-Del.) such orders of the Commissioners, though communicated by the Asstt. Commissioner, would be appealable before the Tribunal. We agree with the above contention of the ld. Advocate. Inasmuch as it is the orders of the Commissioner, though taken on file, which are being communicated by the Asstt. Commissioner, we are of the view that the appeals are maintainable before Tribunal.
6. In the ordinary course, we would have sent the matter back to the Commissioner for proper decision after giving an opportunity to the assessee to put-forth their case inasmuch as the Commissioners orders are without hearing the assessees and are in violation of principles of natural justice, but we proposed to decide the appeals inasmuch as the disputed issues are covered by various decisions of the Tribunal as also of the High Courts. As already noted, the dispute in the present appeal relates to imposition of penalties and to confirmation of interests, as a consequence of the orders of the Honble Supreme Court. We find that the original dispute was only in respect of the determination of annual capacity of production and there were no penalty imposed in the original proceedings.
7. On the success of Revenues appeal before the Honble Supreme Court, thus settling the legal issue in favour of the Revenue, all the assessees became liable to pay the differential duty, which was undisputedly paid by them, subsequent to the disposal of the appeal of the Honble Supreme Court.
8. The question as to whether in such a situation the appellants can be saddled with the liability to pay interest with 100% penalty is the question required to be decided in the present appeals.
9. We find that the provisions of Rule 96(ZP) of the said Compounded Levy Rules were omitted from this Statute Books with effect from 01.03.2001 and Section 3 A of the Act was omitted w.e.f. 11.05.2001, without any saving clause. The Honble Gujarat High Court in the case of Krishna Processors vs. Union of India reported in 2012 (280) ELT 186 (Guj.) has held that after the omission of the said Rules, proceedings cannot be continued under the omitted Rules inasmuch as there was no saving clause. In a recent decision, the Tribunal in the case of Shri Surinder Steel Rolling .. Mill vide its Final Order No. 50689-50690/14 dated 12.02.2014, has taken note of the said decision of the Honble Gujarat High Court in the case of Krishna Processors, as also other decisions of the Honble Supreme Court, and has come to a finding that the adjudication order passed subsequent to 01.03.2001, even where the proceedings were initiated prior to the said date, cannot be sustained.
10. By applying the ratio of the above decision to the facts of the present case, we find that the issue of interest and penalty was initiated against the assessees in the year 2012 and as such cannot be sustained.
11. In any case and in any view of the matter, we find that the provisions of Rule 96 (ZP), of the Annual Capacity Determination Rules have been held to be ultra vires by the Honble High Court of Punjab and Haryana in the case of Bansal Alloys and Metals Pvt. Ltd. vs. Union of India reported in 2010 (260) ELT 343 (P & H) as also by the Honble High Court of Himachal Pradesh in the case of Shubh Timb Steel Ltd. Vs. Union of India reported in 2012 (286) ELT 495 (H.P.). As such, no penalty can be imposed under the said Rules. Otherwise also we find that the original dispute related to Annual Determination of Annual Production Capacity which culminated against the assessees by the order of the Honble Supreme Court. In between, the Tribunals orders as also of the Honble High Courts orders were in favour of the assessees. The said fact reflects that this is a case of bonafide interpretation of the provisions of law and the element of any malafide is missing, in which case imposition of penalty cannot be called for.
12. As regards confirmation of interest, we find that as per the declaration of law by the Honble Delhi High Court in the case of Hindustan Insecticides Ltd. vs. Commissioner of Central Excise LTU, 2013 (297) ELT 332 (Delhi), the Revenue is expected to issue show cause notice within the period of limitation, prescribed under the provisions of Section 11A of the Central Excise Act. The interest does not arise as an automatic appendix to the duty demand. Inasmuch as in the present case, neither show cause notice nor the demand for interest has been made within the limitation period, we find no justification for confirmation of interest.
13. As a result, the appeals filed by the assessees are allowed and the appeal filed by the Revenue is rejected.
[Dictated & Pronounced in the open Court].
(R.K.SINGH) (ARCHANA WADHWA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Anita ?? ?? ?? ?? 8 8