Customs, Excise and Gold Tribunal - Calcutta
Union Enterprises vs Cce on 18 September, 2003
Equivalent citations: 2004(112)ECR356(TRI.-KOLKATA)
ORDER Jeet Ram Kait, Member (T)
1. This appeal is directed againt the order in original No. 90-92 dated 23.11.2000 passed by the Commissioner of Central Excise, Jamshedpur, by which the Commissioner has re-determined the Annual Production Capacity (ACP for short) in the case of Furnance installed in the factory of the assessee as 11520 MT in terms of provisions of Sub-rule 1 of Rule 3 of induction Furnance Annual Capacity determination Rule 97 with effect from 1.9.1997 which was fixed at 9600 MT earlier vide order dated 23.3.1998. The Commissioner has also confirmed a demand of Rs. 29,00,000/- as duty short paid by the assessee for the period from 9/97 to 1/2000 under Section 11A of the CEA 1944, apart from imposing penalty of equal amount in terms of Rule 96ZO of the CER 1944. He has directed the Deputy Commissioner to determine the amount of interest @ 18% payable and communicate to the assessee in terms of Rule 96ZO(3) and directed the assessee to pay the amount determined.
2. The brief facts of the case are that the assessee are manufacturers of MS Ingots/Billets, hereinafter referred to as goods, falling under Chapter sub-heading 7206.90 of the CETA the, goods were liable to duty in terms of the provisions of Section 3A of the CEA 1944 based on Annual Capacity of Production (ACP) in the manner as prescribed under the provision of Rule 96ZO of the CER. The manner in which the aforesaid ACP is to be determined by the Commissioner is set out in Sub-rule 1 of Rule 3 of the Induction Furnance Annual Capacity Determination Rules 1997, hereinafter referred to as the said Rules. Accordingly based on the declaration dated 11.9.1997 filed by the appellants which was supported by a certificate dated 30.8.1997 of the supplier, the commissioner, Central Excise, 30.8.1997 of the supplier, the Commissioner, Central Excise, Jamshedpur vide his order dated 23.3.1998 finally fixed the ACP of the furnace of the assessee as 9600 MT. Since the assessee opted vide their letter dated 11.9.1997 for payment of duty on the goods under the provisions of Sub-rule 3 of the Rule 96ZO of the CER 1944, the assessee was required to pay duty @ Rs. 5,00,000/- only per month. Inasmuch as the fixation of ACP done was on the declaration of the assessee as well as certificate dated 30.8.1997 of the supplier, the Commissioner in terms of the provisions of Sub-rule 2 of Rule 3 of the said Rule, expert opinion was sought for from the National Metallurgical Laboratory, (NML for short) and the NML gave their expert opinion whereby the capacity of the furnace was calculated as 3.4 MT and ACP as 10880 MT in the case of the induction furnace installed in the factory of the assessee. Meanwhile during the search of the factory as well as office premises of the assessee the officers recovered documents relating to the installation of the induction furnace by the assessee and the documents revealed that the capacity of the firnace installed in the factory of the assessee was 3600 Kg (Average) i.e. 3.6 MT instead of 3 MT as per the declaration given by the assessee vide letter dated 11.9.1997 as well as certified by the supplier vide their certificate dated 30.8.1997. In the circumstances a show cause notice bearing No. IV(16)193/IF/Teach/98/15744 dated 15.9.1999 was issued to the assessee inter alia alleging misdeclaration of the capacity of their furnance as 3 MT and also suppression of the actual capacity of the furnance and the SCN sought to re-determine the capacity and demanding duty short paid to the tune of Rs. 19,99,000/for the period from 9/97 to 3/99 as well as imposition of penalty apart from confiscation of land, building, machinery. The supplier was also by the same SCN asked to show cause as to why penalty should not be imposed on him. Apart from this show cause notice two more Demand cum-show cause notices were also issued to the assessee under Rule 9(2) read with Section 11A of the CE Act, 1944 as under:
(a) OC No. V(72)(15)/1/99/5901 dt. 27.9.1999 - Proposing to demand differential duty for the period 4/99 to 8/99 of Rs. 5,00,000/- apart from imposing penalty and demand of interest.
(b) OC No. V(72)(15)19/2000/1909 dt. 3.3.2000 proposing to demand differential duty of a sum of Rs. 5,00,000/- for the period from 9/99 to 1/2000.
3. After considering the reply furnished by the assessee, after granting personal hearing the matter was adjudicated by the Commissioner by which the impugned order has been passed as noted in para 1 above.
4. Aggrieved by the above order, the appellants have come in appeal. The matter was heard on 9.7.2003 when Shri Nambirajan, learned Counsel appeared for the assessee while Shri PK Mondal learned SDR appeared for the Revenue. The learned Counsel for the assessee reiterated the grounds of appeal while the learned SDR reiterated the findings of the Commissioner. After the hearing, the order was reserved. On 11.7.2003 the assessee again submitted a synopsis wherein it is inter alia stated as under:
(a) The Commissioner of Central Excise vide order dated 23.3.1998 finally fixed the ACP of the furnance as 9600 MT in terms of the formula mentioned in Rule 3(3) of the Capacity Determination Rules. 1997. Similarly in respect of the furnance installed in 1999 also the ACP was finally determined by the Commissioner as 9600 MT by taking the capacity of the furnance as 3 MT.
(b) The appellants opted to pay duty @ Rs. 5,00,000/- per month in terms of Rule 96ZO(3) of the CE Rules, 1944 instead of payment of duty Rs. 750/- per MT for 96000 MT in terms of Rule 96ZO (1).
(c) The Commissioner after investigation about the capacity of the furnance issued show cause notice dated 14.9.1999 to the appellants on the ground that the capacity of the furnace was not 3 MT as declared by the appellants, but should be 3.6 MT in view of the Minutes of the meeting held on 23.8.1997 between the manufacturer of the furnace namely ABB and the appellants.
(d) The show cause notice dated 14.9.1999 accepted that there was a quotation placed by ABB on the appellants showing the details of the furnance including the capacity as 3.349 MT which when read with the technical data furnished by the manufacturer is subject to a variation of + 10%. The show cause notice also referred to the determination of capacity of the furnance done by NML including the furnance capacity as 3.4 MT and ACP as 10880 MT.
(e) The show cause notice proposed to fix the capcaity of the said furnance as 3.6 MT in respect of the furnace installed in 1997 and another furnace installed in 1999 in their facotry. The show cause notice accordingly proposed to re-determine the ACP as 3.6 x 3200 = 11,520 MT. In terms of Rule 96ZO (3) the monthly payment of duty in respect of goods producted in the furnance having capacity of 3 MT is Rs. 5,00,000/- and in terms of the proviso to Rule 96ZO (3) in respect of the furnace of capacity higher than 3 MT. The monthly dury payable would be determined on pro-rate basis. Accordingly, the show cause notice determined the monthly payment of duty under Rule 96ZO(3) in respect of furnance of capacity 3.6 MT as Rs. 6,00,000/-
(f) In reply to the show cause the appellant contended that the determination of capacity was not correct and correct capacity was only 3 MT and therefore, duty payable interms of Rule 96ZO(3) will be only Rs. 5,00,000/- per month for furnace. They have also submitted that if the determination of ACP is done now, then the appellants are entitled to claim that the assessment should be done under Section 3A(4) of the CE Act, ibid based on the actual production.
(g) Determination of the ACP has to be based on the invoice of the manufacturer/supplier of the furnance in terms of Rule 3 of the Induction Furnace Annual Capacity Determination Rules, 1997 and if the invoice is not available for any reason with the manufacturer then the Commissioner shall determine the capacity of the furnace on the basis of comparable furnaces installed in any other factory in respect of which the manufactures invoice or supplier's invoice is available, or not possible, on the basis of any other material as may be relevant for the purpose. In the present case, the Commissioner failed to consider this document and directly gone by some other document which is the third option available as per the provisions of Rule 3(2) of the rules ibid. The Commissioner can consider any other material only if the invoice of the manufacturer/supplier of the furnace is not available and also invoice of the manufacturer/supplier in respect of comparable furnaces installed in any other factory is not available. The Commissioner in the present case had gone by materials other then the invoice of the manufacturer/supplier of the furnace and hence the impugned order is not correct.
(h) The Commissioner has to determine the annual capacity based on the invoices of the supplier and not on the certificate issued by the manufacturer in terms of the decision in the case of Jairaj Ispat v. CCE and Granpathi Industries v. CCE reported in 2000 (40) ELT 308
(i) In any case the Commissioner has finally determined the ACP as 9600 MT vide order dated 23.3.1998 and hence he cannot re-determine the ACP Reliance is placed in the case of Govind Mills Ltd. v. CE reported in 2002 (147) ELT 1106 : 2002 (104) ECR 746 (T)
(j) In any case and without prejudice to the above, if re-dertermination is held to be correct, the appellants are entitled to claim the benefit of the assessment under Section 3A(4) of the CE Act. 1944 based on actual production. In terms of Rule 96ZO(1) the assessee is laible to pay duty @ Rs. 750/- per MT on the total annual capacity of production determined.
(k) When the Commissier wants to re-determine the capacity of the furnace as well as ACP, at that point of time the assessee has an option to claim assessment in terms of Section 3A(4) of the actrual production.
(l) The decision rendered by the Hon'ble supreme Court in the case of CCE v. Venus Castings (P) Ltd. is not applicable to those cases, where the ACP is determined and the claim is made by the assessee at that time for assessment under Section 3A(4).
(m) Penalty is not imposable and consequently, interest under Rule 96ZO is also not chargeable.
5. We have carefully considered the submissions made by both the sides and gone through the case records and perused the case laws cited by the assessee. We note that in this case, the following facts remain undisputed:
(a) By order dated 7.10.1997, the ACP of the Induction Furnace of the assessee and 12 other was fixed at 9,600 MT by the Commissioner of provisional basis pending submission of documents by assessees and verification of documents by assessees and verification of documents by the Assistant Commissioner.
(b) By another order dated 23.3.1998 the ACP of the Induction Furnace of the assessee and 12 other were finally fixed by the Commissioner. This facts is also recorded in the order impugned under para 1.2 under heading "Brief facts of the case".
(c) One Induction Furnace was first installed in the factory of the assessee in 1997 and another Induction furnace was installed in 1999.
(d) Three show cause notices were issued proposing to demand duty for different periods as under:
(i) SCN dated 14.9.1999 for the period from 9/97 to 3/99,
(ii) SCN dated 27.9.1999 for the period from 4/99 to 8/99,
(iii) SCN dated 3.3.2000 for the period from 9/99 to 1/2000.
(The total period covered by these SCNs are 9/97 to 1/2000)
6. The issue involved in all these three SCN are one and the same viz. the determination of the ACP of the Induction Furnace installed in the factory of the assessee. Before we proceed to examine the issue, it is necessary to appreciate the relevant provisions of the Act and the Rule made hereunder in regard to Fixation of ACP. Section 3A of the Act reads as under:
Section 3A. Power of Central Government to charge Excise duty on the basis of capacity of production in respect of notified goods-
(1) Not-withstanding anything contained in Section 3, where the Central Government, having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of duty in regard to such goods or such other factors as may be relevant, is of the opinion that it is necessary to safeguard the interest of revenue, specify, by notification in the Official Gazette, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section.
(2) Where a notification is issued under Sub-section (1), the Central Government may, by rules, provide for determination of the annual capacity of production, or such factor or factors relevant to the annual capacity of production of the factory in which such goods are produced, by the Commissioner of Central Excise and such annual capacity of production shall be deemed to be the annual production of such goods by such factory:
Provided that where a factory producing notified goods is in operation only during part of the year, the production thereof shall be calculated on proportionate basis of the annual capacity of production.
(3) The duty of excise on notified goods shall be levied, at such rale as the Central Government may by notification in the Official Gazette specify, and collected in such manner as may be prescribed:
Provided that, where a foctory producing notified goods did not produce the notified goods during any continuous period of not less than seven days, duty calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed.
(4) Where an assessee claims that the actual production of notified goods in his factory is lower than the production determined under Sub-section (2), the Commissioner of Central Excise shall, after giving an opportunity to the assessee to produce evidence in support of his claim, determine the actual production and redetermine the amount of duty payable by the assessee with reference to such actual production at the rate specified in Sub-section (3).
(5) Where the Commissioner of Central Excise determines the actual production under Sub-section (4), the amount of duty already paid, if any, shall be adjusted against the duty so redetermined and if the duty already paid falls short of, or is inexcess of, the duty so redertermined, the assessee shall pay the deficiency or be entitled to a refund, as the case may be.
Rule 3 of the Induction Furnace Annual Capacity Determination Rules, 1997 reads as under:
3. The annual capacity of production referred to in Rule 2 shall be determined in the following maner, namely:
(1) the Commissioner of Central Excise (hereinafter referred to as the Commissioner) shall call for an authenticated copy of the manufacturer's invoice or trader's invoice, who have supplied or installed the furnace or crucible to the induction furnance unit, and ascertain the total capacity of the furnaces installed in the factory on the basis of such invoice or document;
(2) if the invoice or document referred to in Sub-rule (1) is not available for any reason with the manufacturer then the Commissioner shall ascertain the capacity of the furnaces installed in the induction furnace unit on the basis of the capacity of comparable furnaces installed in any other factory in respect of which the manufacturer's invoice or other document indicating the capacity of the furnance is available or, if not so possible, on the basis of any other material as may be relevant for this purpose. The Commissioner may, if he so desires, consult any technical authority for this purpose;
(3) the annual capacity of production of ingots and billetes of non-alloy steel in respect of such factory shall be deemed to be as determined by applying the following formula:
ACP = TCF X 3200, where-
ACP = Annual Capacity of Production of the factory producting ingots and billets of non-alloy steel in metric tonnes; and TCF = Toral capacity of the furnaces installed in the factory producing ingots and billets of non-alloy steel in metric tonnes.
(4) the Commissioner of Central Excise shall, as soon as may be, after determining the total capacity of furnaces installed in the factory as also the annual capacity of production by an order intimate to the manufacture.
4. The capacity of production for any part of the year, or for any change in the total furnace capacity, shall be calculated pro rata on the basis of the annual capacity of production determined in the above manner. In case a manufacturer proposes to increase or reduce the capacity of induction furnace, such manufacturer shall intimate about the proposed change to the Commissioner of Central Excise in writing, with a copy to Assistant Commissioner of Central Excise, at least one month in advance of such proposed change, and shall obtain the written approval of the Commissioner before making such change. Thereafter the Commissioner of Central Excise, shall determine the date from which the change in the installed capacity shall be deemed to be effective.
[Authority-Notification No. 24/97-C.E. (N.T.), dated 25.7.1997 as corrected by Corrigendum F. No. 341-61/97-TRU, dated 30.8.1997.] [(1A) If any manufacturer removesany of the non-alloy steel ingots and billets specified in Sub-rule (1) without complying with the requirements of the provisions of that bub-rule, then all such goods shall be liable to confiscation and the manufacturer shall be liable to a penalty not exceeding three times the value of such goods, or five thousand rupees, whichever is greater.] (2) Where a manufacturer does not produce the ingots and billets of non-alloy steel during any continuous period of not less than seven days and wishes to claim abatement under Sub-section (3) of Section 3A of the Central Excise Act, 1944, the abatement will be allowed by an order passed by the Commissioner of Central Excise of such amount as may be specified in such order, subject to the fulfilment or the following conditions, namely-
(a) the manufacturer shall inform in writing about the closure to the Assistant Commissioner of Central Excise, with a copy to the Superintendent of Central Excise, either prior to the date of closure or on the date of closure;
(b) the manufacturer shall intimate the reading of the electricity meter to the Assistant Commissioner of Central Excise, with a copy to the Superintendent of Central Excise, immediately after the production in his factory is stopped along with the closing balance of stock of the ingots and billets of non-alloy steel;
(c) the manufacturer, when he starts production again, shall inform in writing about the starting of production to the Assistant Commissioner of C. E., with a copy to the Superintendent of Central Excise, either prior to the date of starting production or on the date of starting production;
the manufacturer shall on start of production again along with the closing balance of stock on restarting the factory, intimate the reading of the electricity meter to the assistant Commissioner of Central Excise, with a copy to the Superintendent of Central Excise;
(e) the manufacturer shall while sending intimation under Clause (c), declare that his factory remained closed for a continuous period starting from - hours on - (date) to - hours on - (date) [(3) Notwithstanding anything contained slsewhere in these rules, if a manufacturer having a total furnance capacity of 3 metric tonnes installed in his factory so desires, he may, from the first day of September, 1997 to the 31st day of March, 1998 or any other finacial years, as the case may be, pay a sum of rupees five laks per month in two equal instalments, the first instalment latest by the 15th day of each month, and the second instalment latest by the last day of each month, and the amounts so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st day of September, 1997 to the 31st day of March, 1998, or any other finacial year, as the case may be, subject to the condition that the manufacturer shall not avail of the benefit, if any, under Sub-section (4) of the Section 3A of the Central Excise Act, 1944 (A of 1944):
Provided that for the month of September, 1997 the Commissioner may allow a manufacture to pay the sum of rupees five lakhs by the 30th day of September, 1997:
Provided further the if the capacity of the furnances installed in a factory is more than or less than 3 metric tonnes, or there is any change in the total capacity, the manufacturer shall pay the amount, calculated pro rata:
Rule 96ZO(1) of the CER and, Sub-rule (3) reads as under:
RULE 96ZO. Procedure to be followed by the manufacturer of ingots and billets.- (1) A manufacturer of non-alloy steel ingots and billets falling under sub-heading Nos. 7206.90 and 7207.90 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), shall debit an amount calculated at the rate of Rs. 750 per metric tonne at the time of clearance of ingots and billets of non-alloy steel from his factory in the account-current maintained by him under Sub-rule (1) of Rule 173G of the Central Excise Rules, 1944, subject to the condition that the total amount of duty liability shall be calculated and paid in the following manner:
I. Total amount of duty liability for the period from the 1st day of [September], 1997 to the 31 st day of March, 1998
(a) a manufacturer shall pay a total amount calculated at rate of Rs. 750 per metric tonne on capacity of production of his factory for the period from 1st day of [September], 1997 to the 31st day of March, 1998, as determined under the Induction Furnance Annual Capacity Determination Rules, 1997. This amount shall be paid by 31st day of March, 1998;
(b) the amount of duty already paid, togeter with on-account amount paid by the manufacturer, if any, during the period from 1st day of [September], 1997 to the 31st day of March, 1998, shall be adjusted towards the total amount of duty liability payable under Clause (a);
[(c) if a manufacturer fails to pay the total amount of duty payable under cluase (a) by the 31st day of March, 1998, he shall be liable to pay the outstanding amount (that is the amount of duty which has not been paid by the 31st day of March, 1998) along with interest at the rate of eighteen per cent, per annum on such outstanding amount calculated for the period from the 1st day of April, 1998 till the date of actual payment of the outstanding amount:
Provided that if the manufacturer fails to pay the total amount of duty payable under Clause (a) by the 30th day of April, 1998, he shall also be liable to pay a penalty equal to the outstanding amount of duty as on 30th day of April, 1998 or five thousand rupees, whichever is greater.] II. Total amount of duty liability for a financial year subsequent to 1997-1998
(a) a manufacturer shall pay a total amount calculated at the rate of Rs. 750/- per metric tonne on the annual capacity of production of his factory as determined under the Induction Furnance Annual Capacity Determination Rules, 1997. This amount shall be paid by the 31 st day of March of the finacial year;
(b) the amount of duty already paid, together with on-account amount paid by the manufacturer, if any, during the financial year shall be adjusted towards the total amount of duty liability;
(c) if a manufacturer fails to pay the total amount of duty payable under Clause (a) by the 31st day of March, of the relevent financial year, he shall be liable to,-
(i) pay the outstanding amount of duty (that is the amount of duty which has not been paid by the 31st day of March of the relevant financial year) along with interest at the rate of eighteen per cent. per annum on such outstanding amount, calculated for the period from the 1st day of April of the immediately succeeding financial year till the date of actual payment of the whole of outstanding amount; and
(ii) a penalty equal to such outstanding amount of duty or five thousand rupees, whichever is greater.] In the present case, we are called upon to answer the following questions:
(1) Whether ACP has been fixed by the Commissioner in accordance with Rule 3 of the Induction Furnace Annual Capacity Determination Rules, 1997?
(2) Whether the ACP finally fixed by the Commissioner can be refixed by the commissioner. As he had doubted the genuinenes of the declaration submitted by the assessee, and collected fresh evidence?
(3)Whether, the ACP finally fixed in the instant case, relates to Induction Furnace installed in 1999.
(4) Whether an assessee who opts for payment of duty under Rule 96ZO(3) can opt out of the procedure and have the capacity of production re-determined under Section 3A(4) of the CE Act. 1944.
7. Examining the first question we note that in terms of Rule 3 of the Induction Furnance Annual Capacity Rules, 1997, the Commissioner was bound by law to determine the annual capacity based on the authenticated copy of the manufactuere's or trader's invoice and not based on the declaration given by the assessee which was purported to have been supported by a certificate given by the manufacturer. If the invoice was not available, the next course of action available to the Commissioner was to determine the capacity of the furnace on the basis of the capacity of comparable furnaces installed in any other factory in respect of which also the manufacturer's invoice or supplier's invoice should have been available and if that was not available, then the Commissioner of the bases of any other material as may be relevant for this purpose shall determine the capacity. The Commissioner, may if he so dosires, consult any technical authority for this purpose. The law is thus quite clear on the subject. In the present case, the Commissioner has given a go-by to the first and second options noted above and has proceeded to fix the ACP provisionally be order dated 7.10.1997 and finally by order dated 23.3.1998 without mentioning on what basis he has done so. He has neither referred to any invoice of any one nor the material collected nor about the expert opinion he has based for such fixation. We are at a loos to understand as to how the Commissioner without any of the prescribed document, without application of mind and totally in disregard of the clear provisions of the Rule proceeded to fix the ACP as indicated above. We are therefore of the considered opinion that the ACP fixed by the Commissioner was not in accordance with law and on this score alone, the impugned order is liable to set be set aside. We also note that his reliance of the material collected by the officers of the department who are not technically qualified, was in spite of the fact that he had sought techinical opinion from the NML and which opinion was made available to him. We do not understand the rationale behind such move by the Commissioner. The assessee has relied upon the ruling of the Tribunal in the case of Jairaj Ispat Ltd. v. CCE wherien it was held that annual capacity of induction furnance fixed when based on invoice produced by the applicant, the Commissioner was not empowered to re-determine the annual capacity suo motu. They have also relied upon the decision of the North Regional Bench in the case of Ganpati Industries v. CCE, reported in 2000 (112) ELT 406 wherein also similar view was taken. These decision are clearly distinguishable to the facts of the present case inasmuch as in those cases the ACP was fixed based on the manufacturer's invoice whereas in the present case, as noted above, the Commissioner has not based any invoice as required by the rule.
8. As regards the next question, whether the Commissioner was right in re-determining the ACP after having been fixed provisionally and later finally, we observe that in the instant case, the ACP fixed provisionally and later finally was not in accordance with Induction Furnace Annual Capacity Determination Rule, 1997 and it was after new facts came to light viz. expert opinion of the NML, the evidence, investigations of various parameters of the induction furnace, and on the basis of trial run the Commissioner proceeded to re-determine the ACP after issue of show cause notice and after considering their replies to the show cause notices. The assessee has relied upon the ratio of the North Regional Bench. CEGAT in the case of Govind Mills Ltd. v. CCE, reported in 2002 (147) ELT 1106 : 2002 (104) ECR 746 (T) wherein it was held that once the Collector had finally determined the capacity of the induction furnace he could not review his order as he has become functus officio. We are of the considered opinion that this case is distinguishable from the facts of the case, inasmuch as in those cases, the capacity of the indection furnace was first provisionally and then finally fixed in accordance with the Annual Capacity Determination Rules, 1997, whereas in the instant case, as noted above, it cannot be said that neither the provisional fixation nor the final fixation was in accordance with the rules ibid. No doubt, the Commissioner ought to have called for the authenticated copy of the invoice and considered the same before fixing the ACP. In this case it was not done and any deficiency on the part of the Commissioner in this regard need not necessarity lead to a conclussion that in the light of the new evidence came to light, the Commissioner has become functus officio to re-determine the ACP. The broader possibilities were required to be examined and we cannot get swayed by such deficiency. Therefore, this case law does not come to the rescue of the assessee and we are of the considered opinion that in the facts and circumstances of this case, it cannot be said that the Commissioner was not right in proceeding to re-determine the ACP.
9. Coming to the next question, as to in respect of which Induction furnace the final order dated 23.3.1998 determining the ACP has been passed, we observe that in the instant case, the assessee has stated in thesynopsis that one Induction Furnace was installed in the factory of the assessee in 1997 and another one in 1999 and the show cause notice proposed to fix the ACP of both the furnaces. We note that there are three show cause notices dated 14.9.1999, 27.9.1999 and 3.3.2000. In all these show cause notices it is stated that the assessee through their letter dated 24.9.1997 submitted certificate dated 30.8.1997 of the supplier and it was based on that certificate. The Commissioner had finally fixed the ACP vide his order dated 23.3.1998. The order impugned also deals with only one induction furnace and it does not say anything about the induction furnace said to have been installed in 1999. Further in the grounds of appeal also, the appellants have not stated anything about the induction furnace installed in 1999. It is only in the synopsis submitted after the hearing of the appeal was over, that the assessee has brought in this new fact. Further, the impugned order also has noted in para 10 as well as in the order protion that the annual capacity of production is 11520 which is worked out as under and it relates to one Induction Furnance only.
ACP = TFC x 3200 ACP = Annual Capacity of Production of the factory producing ingots and billets of non-allow steel in metric tonnes.
TFC = Total capacity of Furnaces installed in the factory producing ingots and billets of non-alloy steel in metric tonnes.
Hence: 3.6 x 3200 = 11,520 MT (according to Department) 3.00 x 320 = 9.600 MT (according to assessee 86 finally fixed by Commissioner earkuer) Farther, the certificate dated 30.8.1997 which was submitted by the assessee to the Department and based on which the ACP was finally fixed vide order dated 23.9.1998 also state the capacity of Induction Furnance as 2.5 Tonnes to 3.0 Tonnes and the certificate dated 23.9.1998 (sic read 3.8.1997) issued by the manufacturer which certifies about the supply already made obviously cannot relate to an Induction Furnance supplied in 1999. However, this aspect of the matter is required to be verified by the Commissioner as to whether a second Induction Furnace was installed in the factory of the assessee and if so when, and if it is found that a second Induction furnance was installed, it is open to the Commissioner to fix the ACP of the same in accordance with law. If he has not already done.
The next question is regarding the option of the assessee ***aty under Rule 96ZO(3) of the CER and under Section of the CEA, 1944. This question has already been answered by the Hon'ble Apex Court in the case of CCE & Cus. v. Venus Castings (P) Ltd. wherein in para 10 it is held that if the asessee opts for procedure under Rule 96ZO (1) he may opt out of the scheme for a subsequent period period and seek the re-determination of annual capacity of production. It is further held therein that the assessee connot have a hybrid procedure of combining the procedure under Rule 96ZO(1) to which Section 3A(4) is attracted. Para 10 of the said judgment is reproduced below for convenience of reference.
10. The schemes. Contained in Section 3A(4) of the Act and Rule 96ZO(3) or Rule 96ZP(3) of the Excise Rules are two alternative procedures to be adopted at the option of the assessee. Thus the two procedures do not clash with each other. If the assessee opts for procedure under Rule 96ZO(1) he may opt out of the procedure under Rule 96ZO(3) for a subsequent period and seek the determination of annual capacity of production. An assessee cannot have a hybrid procedure of combining the procedure under Rule 96ZO(1) to which Section 3A(4) of the Act is attracted. The claim by the respondents is a hybrid procedure of taking advantage of the payment of lumpsum on the basis of total furnace capacity and not the basis of actual capacity of production. Such a procedure cannot be adopted at all, for the two procedures are alternative schemes of payment of tax.
In terms of the above cited judgment of the Hon'ble Apex Court the assessee can opt out of the scheme during the subsequent financial year and he is not permitted to opt of the scheme during the particular financial year for he has already given an option. Ths this point stands clarified accordingly.
11. As we have held above, inasmuch as the present order of the Commissioner in fixing the ACP of the induction Furnace was NOT in accordance with law and hence the same is required to be re-determined, we set aside the impugned order and remand the matter to the Commissioner for re-fixation of the ACP in accordance with law. While re-determining the ACP, the Commissioner shall make available to the assessee the expert opinion given by the NML by which they have opined that the capacity of Induction furnace was 3.4 MT and the ACP as 0.880. The Commissioner shall also made available to the assessee, as to how they (the departmental officers) who are not experts in the filed have come to the conclusion that the capacity of the Induction Furnace is 3.6 MT and the ACP is worked out as 11.520 MT. The assessee shall be given effective opportunity to confront the findings of the NML as well as that of the Depertment in support of their plea. The assessee is at liberty to bring in all evidece that they wish to support their case. We make it clear that we are not expressing any opinion on the merits of the case so far as the capacity of the Induction Furnace and the ACP to be re-fixed, as this is to be done in the de novo proceedings in accordance with law.
12. The appeal is thus allowed by remand in the above terms.
(Pronounced in open Court on 18.9.2003)