Customs, Excise and Gold Tribunal - Tamil Nadu
Bhuwalka Steel Industries Ltd. vs Cce on 1 February, 2005
Equivalent citations: 2005(185)ELT73(TRI-CHENNAI)
ORDER P.G. Chacko, Member (T)
1. After examining the records and hearing both sides, we are convinced of the need to dispose of the appeal finally. Accordingly, after dispensing with predeposit we take up the appeal for disposal.
2. The appellants were, during the material period, working under the Compounded Levy Scheme under Rule 96 ZP of the Central Excise Rules, 1944 read with Section 3A of the Central Excise Act, 1944. Under the said scheme, they had to discharge duty liability on their products (hot re-rolled non-alloy steel products) on the basis of the annual capacity of production (ACP) to be determined by the jurisdictional Commissioner of Central Excise under the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 (for short ACD Rules). Three show-cause notices were issued by the Department demanding duty from the appellants for the period Mar.-Aug.'98 and July '99-Mar.2000, amounting to Rs. 11,15,783/- Penalties - were also proposed in these notices. The demand of duty was based on ACP allegedly determined by the Commissioner. But the appellants had not received any order from the Commissioner determining their ACP. They, however, were in receipt of certain communications from the Department in this connection. A letter dated 14.02.1997 of the Assistant Commissioner, received by the appellants, stated that their ACP had been provisionally fixed at 10,378.163 MTs with effect from 01.09.1997 by the Commissioner under Section 3A. The subsequent letter of the Assistant Commissioner dated 06.04.1998, reads thus:-
"I am directed to inform that the Annual Capaticy of Production has been finally fixed by the Commissioner as 11,599.800 MTs. with effect from 1.9.97 without prejudice and subject to the result of the Writ Petitions pending in the Madras High Court and duty has to be paid at the applicable rates for the period from 1.9.97 to 31.3.98. Delayed payment after 31.3.98 will attract an interest at the rate of 18% per annum, and apart from that you are liable to pay penalty equal to the outstanding amount of duty or, five thousand rupees whichever is greater in terms of this office Trade Notice No. 13/98 dated 20.3.98 ".
The aforesaid show-cause notices were adjudicated by the original authority confirming against the party the entire demand of duty and imposing on them equal amount of penalty. Against the order passed by the said authority, the party went in appeal to the Commissioner (Appeals) and the latter directed them to predeposit Rs.6,38,576/- each towards duty and penalty for the purpose of Section 35 F of the Central Excise Act. The party did not make the deposit. Consequently, their appeal was dismissed for non-compliance with Section 35 F. Hence the present, appeal before us.
3. Heard both sides. Ld. Counsel for the appellants submits that no order of the Commissioner determining their ACP was received by them. The Assistant Commissioner's letters communicating provisional and final determination, by the Commissioner, of their ACP did not meet the requirements, of Rule 4 of the ACD Rules. In the absence of valid order of determination of ACP, any demand of duty under Rule 96 ZP read with Section 3A is not sustainable in law. Ld. SDR submits that the Assistant Commissioner's communication of ACP was not challenged by the assessee and, therefore, the above argument against the demand of duty is not tenable. Ld. SDR also points out that, in a similar case of another party viz. M/s Kanishk Steel Industries, the Hon'ble High Court of Madras had occasion to consider an Assistant Commissioner's communication of ACP said to have been determined by Commissioner.
4. We have considered the submissions. We find that, in the case of Kanishk Steel Indu is tries Ltd., cited by ld. SDR. the party had received a communication from the Assistant Commissioner regarding their ACP which was said to have been determined by the Commissioner. The party never received any order of the Commissioner. They challenged the Assistant Commissioner's proceedings before the Tribunal in an appeal which was delayed by 1550 days. The Tribunal refused to condone this delay. Aggrieved, the party approached the High Court in Writ Petition No.584/2003. This Writ petition was disposed of by the Hon'ble High Court as per judgement dated 22.09.2003, wherein a direction was issued to the Commissioner to serve his order of determination of ACP on the assessee and liberty was given to the latter to challenge such order before the Tribunal. We are of the view that the instant case should be disposed of in similar manner as it is not disputed that any order of the Commissioner determining the appellants' ACP was not served on them.
5. Rule 4 of the ACD Rules required the Commissioner to determine ACP quasi-judicially and communicate his order to the manufacturer. Any letter sent by any subordinate officer intimating to the party an ACP claimed to have been determined by Commissioner would not serve this requirement of law. Nor would such letter be a legally valid basis for demand of duty. Therefore, after setting aside the Assistant Commissioner's proceedings dated 14.10.1997 and 06.04.1998, we direct the jurisdictional Commissioner of Central Excise to determine the ACP of the appellant-unit for the relevant period in accordance with law and the principles of natural justice and duly communicate the same to the party. He shall also quantify the demand of duty after taking into account the payments already made by the party. In the circumstances, the Order-in-Original confirming demand of duty without valid ACP order and the impugned Order-in-Appeal are set aside.
6. The appeal is allowed in the above terms.