Customs, Excise and Gold Tribunal - Delhi
Ganpati Industries vs Commissioner Of Central Excise on 16 August, 2000
Equivalent citations: 2000(122)ELT406(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In this appeal filed by M/s.Ganpati Industries, the issue involved is whether the liability to pay Central Excise duty can be redetermined under Section 3A(4) of the Central Excise Act and whether the Commissioner had rightly taken the capacity of induction furnace for the purpose of charging the Central Excise duty under Rule 96 ZO(3) of the Central Excise Rules.
2. Shri R. Santhanam, learned Advocate, submitted that the Appellants manufacture M.S. ingots in their induction furances installed in their factory; that induction furnace of 3 M.T. was supplied and installed by M/s. Inductotherm (India) Ltd. in 1995; that after introduction of Section 3A of the Central Excise Act, the appellants on 22.08.1997 made the declaration of the capacity of furnace as 3 M.T. and also enclosed the manufacturer's invoice dated 31.03.95 with technical specifications; that the appellants were discharging their duty liability @ Rs. 5 Lakhs under Rule 96ZO(3); that subsequently the Commissioner under order dated 19.03.98 for the period from 01.09.97 to 30.09.97 determined the capacity as 18,464 M.T. and for the period from 01.10.97 determined the capacity as 10,464 M.T. as per order dated 27.03.98; that the appellants made a request on 06.01.98 for redetermination of the capacity. The learned Advocate further submitted that on appeal filed by them the Appellate Tribunals vide final order No. A/653-655/98-NB dated 26.09.98, remanded the matter for redetermination of duty payable with reference to the actual production under Section 3A(4) of the Central Excise Act; that on remand the Commissioner under the impugned order dated 07.11.98 maintained his earlier two orders and determined the capacity to be 18464 M.T. upto 30.09.97 and 10,464 M.T. from 01.10.97 disregarding the direction contained in the Tribunal's final order dated 29.06.98.
3. The learned Advocate further mentioned that in view of the Supreme Court judgment in the case of CCE v. Venus Castings (P) Ltd., 2000 (117) E.L.T. 273 (S.C.), he would not press for the redetermination of annual production capacity on the basis of actual production under Section 3A(4) upto the period 31.05.98. He further mentioned that in view of the decision of the Supreme Court in this case an Assessee may opt out of the procedure under Rule 96ZO(3) for a subsequent period and seek determination of annual capacity of production and accordingly the appellants' capacity should be redetermined w.e.f. 01.06.98 as they had made a request for redetermination of their capacity on the basis of actual production on this date. In support of his contention he also relied upon the decision of the Tribunal in the case of Shivangi Steel Pvt. Ltd. v. CCE, Kanpur, Final Order No. A-494/2000-NB dated 14.06.2000 wherein the Tribunal remanded the matter to the Commissioner for determining the annual production capacity as the Appellants had withdrawn the option to pay duty in accordance with the provisions of Rule 96ZO(3) and had opted to pay duty on the basis of actual production under their letter dated 15.04.98 and 30.04.98. Regarding duty liability before 01.06.98 the learned Advocate submitted that as per the invoice issued by the supplier the capacity of the furnace is only 3 M.T.; that in respect of said furnace the capital goods credit was allowed to them on production of invoice, and, therefore, the findings of the Commissioner that the appellants have only supplied commercial invoice and not excise invoice, that only after a lapse of 14 months the Appellants had submitted photocopy of invoice dated 31.03.95 and there was no correlation between these invoices and the furnace installed in their factory are not correct. He finally submitted that the calculations on the basis of which the capacity of the furnace was determined to be 3.27 M.T. attached with the impugned order does not indicate as to how 3.27 M.T. was arrived at. The learned Advocate, therefore, pleaded that the capacity of the furnace may be taken to be 3 M.T. as per invoice issued by the supplier.
4. Shri V.M. Udhoji, learned D.R. submitted that the option exercised by the appellants to discharge the duty liability under Rule 96ZO(3) is for a financial year i.e. from April to March; that as the Appellants had opted to pay the duty under Rule 96ZO(3) even in the financial year 1998-99 they cannot opt out of the scheme in the middle of the financial year.
5. we have considered the submissions of both the sides. The Apex Court in the case of M/s. Venus Castings Pvt. Ltd. (supra) has held that "by reasons of the Assessee having exercised his desire of paying duty based on total furnace capacity the determination of annual capacity of production is not determined by the Revenue as the procedure adopted obviates determination of production. In the absence of determination of production the question of its determination on the basis of actual production as detailed in Section 3A(4) of the Act does not arise." The learned Advocate for the appellants has, in view of this decision, given up the claim for redetermining of the production capacity in terms of Section 3A(4) for the period prior to 01.06.98. Accordingly the appellants have to pay the duty for the period prior to 01.06.98 on the basis of capacity of the induction furnace installed in their unit. It has not been disputed by the Revenue that the appellants have submitted a letter dated 01.06.98 requesting the Commissioner to redetermine the duty liability based on actual production in terms of Section 3A(4) of the Central Excise Act. The Supreme Court in Venus Castings case has clearly held that "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." It is thus evident that an Assessee can opt out of the procedure of Rule 96ZO(3) and can opt for the procedure prescribed in Rule 96ZO(1) even during the financial year. Accordingly, the matter has to be remanded to the Commissioner with the direction to redetermine the annual capacity of production of the appellants w.e.f. 01.06.98.
6. Rule 96ZO(3) provides that a manufacturer shall pay a total amount calculated @ 750/- per M.T. on the annual capacity of production of his factory as determined under the Induction Furnace Annual Capacity Determination Rule, 1997. According to Rule 3 of these Rules the annual capacity of production shall be determined by the Commissioner on the basis of authenticated copy of the manufacturer's invoice who has supplied or installed the furnace. In case of non-availability of invoice Rule 3 further provides that the Commissioner shall ascertain the capacity of the furnace on the basis of capacity of comparable furnaces installed in any other factory in respect of which the manufacturer's invoice indicating the capacity of the furnace is available and the Commissioner may consult any technical authority for this purpose. The appellants have submitted the invoice of M/s. Inductotherm Ltd. which clearly shows the capacity as 3000 kgs. The learned Advocate submitted that they had availed of capital goods credit at the time of installation of the furnace in their factory. As the invoice clearly shows the capacity of the furnace in view of Rule 3 of the Induction Furnace Annual Capacity Determination Rules, the capacity has to be determined on the basis of manufacturer's invoice or trader's invoice. It is not the case of the Revenue that the capacity of the induction furnace has been wrongly shown by the manufacturer. The learned Advocate has relied upon the decision in the case of Arihant Steel v. CCE, New Delhi, 1998 (28) RLT 231 wherein it was held that "when the appellants had produced certificate from the manufacturer of the furnace as well as their invoice which showed the capacity as 1 M.T. in addition to certificate from the National Institute of Secondary Steel Technology ... showing the capacity as 1 M.T.," there was no need for Commissioner to ascertain the position by alternative method provided under Sub-rule (2) of Rule 3. Accordingly the Appellants are required to pay duty on the basis of the capacity of the furnace mentioned in the manufacturer's invoice.
7. The appeal is, thus, disposed of in the above terms.