Andhra HC (Pre-Telangana)
Sathavahana Steels & Alloys (P) Ltd. vs Government Of India, Ministry Of ... on 2 August, 1999
Equivalent citations: 1999(5)ALD225, 1999(5)ALT27, 1999(114)ELT787(AP)
Author: P. Venkatarama Reddi
Bench: P. Venkatarama Reddi
ORDER P. Venkatarama Reddi, J.
1.The petitioners are the manufacturers of mild steel ingots having induction furnaces of the capacity ranging between 2 Mts. and 3 Mts. They have filed these writ petitions questioning the Rule 96 ZO(3) introduced by the Central Excise 6th Amendment Rules by virtue of notification No.27/1997 dated 25-7-1997 and they seek a direction to respondents I and 2 to levy excise duty by giving allowance to the power cut imposed by APSEB. Sub-rule (3) of Rule 96 ZO reads as follows:
"Notwithstanding anything contained elsewhere in these Rules, if a manufacturer having a total furnace capacity of 3 metric tonnes installed in his factory so desires, he may, in the beginning of each month from 1st day of August, 1997 to the 31st day of March, 1998 or any other financial year, as the case may be, and latest by the tenth of each month, pay a sum of rupees five lakhs and the amount so paid shall be deemed to be full and final discharge of his duty liability for the period from the 1st day of August, 1997 to the 3Ist day of March, 1998, or any other financial year, as the case may be, subject to the condition that the manufacturer shall not avail of the benefit, if any, under proviso to sub-section (3) or under sub-section (4) of the Section 3A of the Central Excise Act, 1944 (1 of 1944)",
2. Sub-rule (4) provides that if the Manufacturer wishes to avail of discharging the duty liability in terms sub-rule (3), he shall inform the Commissioner, Central Excise with a copy to the Asst. Commissioner in the following proforma:
"We...... (name of the factory), located at ......(address) hereby wish to avail of the scheme described in sub-rule (3) of Rule 96 ZO, for full and final discharge of our duty liability for the manufacture of ingots and billets of non-alloy steel under Section 3-A of the Central Excise Act, 1944(1 of 1944)".
3. Rule 96 ZO and 96 ZP with four sub-rules contained therein are meant to give effect to the provisions of Section 3-A of the Central Excise Act inserted by the Finance Act of 1997. It makes the provision to charge excise duty on notified goods at specified rates on the basis of annual capacity of production or such other factors relevant to annual capacity of production. The proviso to sub-section 3-A provides for abatement of duty if the factory did not produce notified goods for a continuous period of 7 days or more subject to fulfilment of the prescribed conditions. Sub-section (4) provides for re-determination of duty with reference to actual production of the assessee on producing necessary evidence in that behalf. The other sub-sections are not relevant.
4. Coming to Rule 96 ZO with which we are concerned sub-rule (1) lays down that manufacturer of non-alloy steel ingots and billets shall debit the amount calculated at the rate of Rs.750/- per Mt. at the time of clearance from his factory in the current account maintained by him under Rule 173G. The manner of calculation of duty liability is then set out. The total amount of duty liability for the period 1st August, 1997 to 31-3-1998 is laid down as follows:
"(a) A manufacturer shall pay a total amount calculated at the rate of Rs.750 per metric tonne on capacity of production of his factory for the period from 1st day of August, 1997 to the 31st day of March, 1998, as determined under the Induction Furnace Annual Capacity Detenu ination Rules, 1997. This amount shall be paid by 31st day of March, 1998;
b) The amount of duty already paid, together with on account amount paid by the manufacturer, if any, during the period from 1st day of August, 1997 to the 31st day of March, 1998, shall be adjusted towards the total amount of duty liability payable under clause (a)."
In case of default in payment by 31-3-1998, the outstanding amount shall bear the interest at the rate of 18% per annum. In the same terms, the total amount of duty liability for the financial year subsequent to 1997-98 is laid down. The conditions for claiming relief under sub-section (3) of 3-A are specified in sub-rule (2). Then comes sub-rule (3) which has already been extracted above.
5. The petitioners admittedly opted for the compounded levy embodied in Rule 96 ZO3. The petitioners submit that APSEB imposed 20% power cut and as a result thereof, the full utilisation capacity of the induction furnaces has been affected. The petitioner in W.P.No.25457 of 1997 who filed the writ petition in September, 1998 claims remission of excise duty for the period 1-8-1997 to 31-3-1998 in respect of its 2.5MT capacity furnace. The petitioner in WP No.10807 of 1998 who filed the wit petition in April, 1998 submits that if the power cut is taken into account, the liability comes to Rs.4 lakhs per furnace per month instead of Rs.5 lakhs. The petitioner in WP No.10807 of 1998 also submitted a representation to the Central Government as well as to the Commissioner of Central Excise. The communication sent by the Deputy Secretary, Department of Revenue, Government of India says that the rates of duty applicable to the Units governed by Section 3-A have been fixed "taking into account all aspects" and therefore, it is not possible to accede to the petitioners' request. The Commissioner informed the petitioner that there was no provision to grant abatement of duty on account of power cuts as such abatement can only be given under Rule 96 ZO(2). Thereafter, the present writ petitions were filed.
6. We are of the view that there is no valid ground to assail the validity of sub rule (3) of Rule 96 ZO. Sub-rule (3) has been framed for the facility of the assessees. It is left to the volition and option of the assessee to avail of the procedure under sub-rule 3 instead of the procedure prescribed under sub-rules (1) and (2). When once the assessee avails of the option provided by sub-rule (3), he takes advantages and disadvantages associated with it. It is not open to the assessee to say that he would only avail of the beneficial part of the rule leaving the incidental disadvantages. An assessee who comes under the purview of sub-rule (3) scheme, cannoot obviously avail of the reliefs provided to the assessee who preferred to pay duty in accordance with sub-rule (1). He is bound by the conditions prescribed by the rule and cannot carve out exceptions to suit his needs. He cannot have the best of both worlds. The petitioner opted for the scheme with eyes wide open. It is difficult to believe that he was not aware of the power cuts and other adverse factors which are not unusual. Irrespective of the fact whether the Central Government in fixing the lumpsum amount of Rs.5 lakhs under sub-rule (3) had taken into account the eventuality of power cuts, the petitioner who opted for the scheme under sub-rule (3) on his own volition and choice, cannot be allowed to complain of the validity of that rule. Nor can he claim that the provisions for abatement of duty and redetermination of the capacity as contained in the proviso to sub-section (3) and subsection (4) of Section 3-A should be imported into Rule 96 ZO (3). When once the assessee opts for lumpsum payment under Rule 96 ZO(3), he forgoes the benefit under the proviso to sub-section (3) and subsection (4) of Section 3-A as laid down in express and categorial terms by sub-rule (3) of Rule 96 ZO. The argument advanced on behalf of the petitioners ignores the crucial point that payment of duty as per sub-rule (3) is not compulsive, but is only optional. We therefore fail to see how the assessee could challenge the same, more so after he voluntarily opted for the scheme. In fact, we are inclined to think that the lumpsum duty on compounded basis would be much less than the duty payable with reference to capacity of production and that is why the petitioners opted for the same.
7. The stand taken by the Commissioner, Central Excise that there is no provision for abatement or refixation of duty in a case governed by Rule 96 ZO(3) is, in our view, unassailable. The learned Counsel has relied on a recent decision of the Division Bench in Sarwotham Ispat Ltd. v. Government of India, . That was also a case in which the assessee was governed by the scheme under 96 ZO(3). The discussion proceeds on the basis that the relief can be given under sub-sections (3) and (4) of Section 3-A in case of eventualities such as power restrictions. But their Lordships have not noticed the concluding words of the sub-rule (3) i.e., "subject to the condition that the manufacturer shall not avail of the benefit, if any, under proviso to sub-section (3) or under sub-section (4) of the Section 3-A of the Central Excise Act, 1944 (1 of 1944)".
8. Insofar as the observations suggest that the assessee who has opted to the scheme under sub-rule (3) can invoke the proviso to sub-section (3) and sub-section (4) of Section 3-A, they go counter to the specific exclusionary provision in Rule 96 ZO(3). Such observations must therefore be deemed to have been made per incuriam, In any case, the direction which their Lordships ultimately issued in the operative portion of the judgment necessarily implies that the relief can only be worked out within the framework of the rule. This is what the Division Bench said in the last sentence of the judgment:--
"....... This is, however, subject to the availability of the relief in terms of the Rules framed under Sections 3 and 3-A of the Act".
We therefore see no merit in the writ petitions.