Custom, Excise & Service Tax Tribunal
M/S. Jai Bhavani Steel Enterprises Ltd vs Cce, Chennai on 22 April, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. E/158/2001
(Arising out of Order-in-Original No. 11/CLS/2000-TECH dated 31.10.2000 passed by the Commissioner of Central Excise, Chennai II, Chennai)
For approval and signature:
Honble Mr. P. G. Chacko, Member (Judicial)
Honble Mr. P. Karthikeyan, 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 the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. Jai Bhavani Steel Enterprises Ltd. Appellants
Vs.
CCE, Chennai Respondent
Appearance Shri S. Murugappan, Advocate for the Appellants Shri M.K.A.K. Mohideen, JDR, for the Respondent CORAM Honble Mr. P. G. Chacko, Member (J) Honble Mr. P. Karthikeyan, Member (T) Date of Hearing: 22.04.2008 Date of Decision: 22.04.2008 Final Order No. ____________ Per P. G. CHACKO The appellants are engaged in the manufacture of MS ingots (Heading 72.06 of the CETA Schedule). They were working under the compounded levy scheme under Section 3A of the Central Excise Act from 1.9.1997 till the date on which that scheme was abrogated and accordingly they were paying duty on the basis of the Annual Capacity of Production (ACP) determined by the jurisdictional Commissioner. Prior to 1.9.1997, they were discharging duty liability in terms of Section 3 of the Act. There was a confusion which prevailed at the time of transition to the compounded levy scheme. The scheme as originally notified by the Central Govt. was to come into force on 1.8.1997. Subsequently, by an amending notification, the Govt. postponed the date of commencement of the scheme to 1.9.1997. Confusion arose as to whether, for the month of August 1997, manufacturers of MS ingots should pay duty of excise at the Tariff rate in terms of Section 3 of the Central Excise Act or in terms of the Commissioners order determining ACP and monthly duty liability in terms of Section 3A of the Act. As far as the appellants were concerned, they did not pay any duty at all for the month of August 1997. However, for the subsequent period, they paid duty under the compounded levy scheme, from time to time. We note that these payments were made during February to April 1998 and in August 1999. These payments totaled to over Rs.66.00 lakhs. On 19.12.1997, the department issued a show-cause notice demanding duty at the rate of 15% advalorem from the appellants for the month of August 1997, under Section 11A of the Central Excise Act r/w Rule 9(2) of the Central Excise Rules, 1944. In their reply to the show-cause notice, the appellants contested the demand of duty and requested for recall of the demand notice. In their subsequent written submissions, they stated that the payments already made by them during February to April 1998 covered the amount of duty for the month of August 1997 also. In adjudication of the dispute, learned Commissioner confirmed the demand of duty to the extent of Rs.1,34,442/- against the party and imposed on them a penalty of Rs.20,000/-. The present appeal is against the Commissioners decision.
2. In the impugned order, learned Commissioner has inter alia referred to Notification No. 4/2000 CE (NT) dated 31.1.2000 issued by the Central Govt. under Section 11C of the Central Excise Act and states that the duty liability for the month of August 1997 at the rate of Rs.600/- per MT in terms of the said Notification and Notification No. 50/1997 (as amended) worked out to Rs.9,67,911/-. Learned Commissioner then proceeds to quantify the outstanding dues after adjusting the payments already made by the party. On these basis, she has arrived at the duty amount of Rs.1,34,442/-.
3. It is fairly conceded by learned counsel for the appellants that their claim is only under Notification No. 4/2000-CE (NT) dated 31.1.2000 for the month of August 1997. Accordingly, their admitted liability is to have paid duty of Rs.600/- per MT, which is claimed to have been paid for the said period. It is the consistent case of the appellants that this payment of duty is fully covered by the payments they actually made during the period January to April 1998 and August 1999. It is submitted by learned counsel that there is no outstanding dues. As regards the penalty imposed by the Commissioner, it is submitted by counsel that, in the peculiar facts and circumstances of this case, such penalty is not sustainable. We have heard learned JDR also, who has reiterated the findings of the Commissioner.
4. After considering the submissions, we note that the controversy has narrowed down to a pure arithmetical question. Admittedly, the appellants were liable to pay duty at the rate of Rs.600/- per MT for the month of August 1997 in terms of Notification No. 4/2000 CE (NT) ibid. It is asserted by them that this duty is also part of the payments they already made in 1998 and 1999. However, it appears from the impugned order that a certain payment made in August 1999 is towards interest on duty for the period September 1997 to March 1998. In this connection also, it is assertively submitted by the counsel that the payment was made not towards interest but towards duty. We are of the view that this aspect also has to be examined by the lower authority at the time of verification of the particulars of payments. If, upon such verification, it is found that the payment made by the party in August 1999 was towards interest rather than duty, such amount shall not be counted as part of the duty payments. Otherwise, that amount also will form part of duty payments. If the gross amount of duty paid by the party for the period August 1997 to March 1998 is found to have satisfied the requirements of Notification No. 4/2000 CE (NT) ibid for the month of August 1997 and the compounded levy scheme for the subsequent period, there shall be no further demand of duty on the appellants. In the event of any shortfall being found, the same shall be treated as short-payment of duty for the month of August 1997 and the same shall be paid by the appellants upon completion of verification by the Commissioner. Contextually, it is made clear that the party shall be given a reasonable opportunity of being heard also. As regards the penalty, we have found a valid point in the challenge made in this appeal. Obviously, the duty liability of the appellants for the month of August 1997 came to be determined by the Central Govt. through Notification No. 4/2000 CE (NT) dated 31.1.2000 only. The duty is claimed to have been paid long before that. In the circumstances, in our view, there is no room for imposing any penalty on the party. The impugned penalty is therefore set aside. It is made clear that it will not be open to the Commissioner to consider any further penal liability.
The appeal is disposed of in the above terms.
(Dictated and pronounced in open court)
(P. KARTHIKEYAN) (P.G. CHACKO)
Member (T) Member (J)
Rex
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