Madras High Court
Salem Steel Industries vs Union Of India (Uoi) on 4 September, 2001
Equivalent citations: 2002(141)ELT12(MAD)
Author: D. Murugesan
Bench: D. Murugesan
ORDER D. Murugesan, J.
1. The petitioner has filed this writ petition challenging the order of the 2nd respondent dated 27-3-98 wherein the 2nd respondent rejected the request of the petitioner made in his letter dated 14-11-97. According to the petitioner, the petitioner is a re-rolling mill manufacturing CTD Bars, Squares, Rounds, M.S. Bars, etc. which are excisable commodities. The petitioner is also a registration certificate holder under the Central Excise Act. In July 1997, a new scheme was introduced under the Central Excise Act by inserting Section 3-A wherein the manufactures of the products manufactured by a re-roller have to pay excise duty on the annual capacity of production with effect from 1-9-97. The petitioner filed a declaration with the respondents on 1-9-97 declaring that the furnace used by the petitioner is of pusher type. Thereafter, the petitioner after technical opinion by chartered engineers filed another declaration on 14-11-97 to the effect that the petitioner is using only batch type furnace. The said application came to be rejected by the impugned order on the ground that the jurisdictional Assistant Commissioner of Central Excise who examined and verified the factory premises of the petitioner reported that the furnace installed in the petitioner factory premises is pusher type and not batch type. Aggrieved by the same, the present writ petition has been filed.
2. Mr. K. Jayachandran, learned Counsel for the petitioner would challenge the said order on the ground that under the provisions of Section 3A(2) of the Central Excise Act, 1944, which was inserted with effect from 14-5-97 by Section 81 of the Finance Act, 1997, the Commissioner of Central Excise is the competent authority to determine the annual capacity of production or such factor or factors relevant to the annual capacity of production of the factory. However, the impugned order has been passed by the Deputy Commissioner (Technical) for Commissioner of Central Excise. Hence, the learned Counsel submitted that the impugned order is outside the powers of Section 3A(2) of the Act. The learned Counsel would further challenge the order that even though the petitioner had requested for inspection by experts, the Assistant Commissioner alone inspected without the insistence of experts and the Assistant Commissioner is not the expert over the same. Hence, the report of the Assistant Commissioner can not be the basis for the impugned order. In any event, the learned Counsel submitted that the report of the jurisdictional Assistant Commissioner was not furnished to the petitioner before the same was relied upon. Therefore, the learned Counsel submitted that in the event the request of the petitioner made in letter dated 14-11-97 is accepted, the petitioner is liable to pay only lesser tax and by the impugned order, such a right to the petitioner has been taken away without giving any opportunity. Hence, the learned Counsel seeks for the quashing of the impugned order.
3. Heard the learned Counsel for the respondents. The learned Counsel for the respondents submitted that the petitioner earlier declared on 1-9-97 that it was using the furnace which is pusher type. However, within a period of two months, the petitioner by another letter dated 14-11-97 has further intimated that the furnace used by the petitioner is of batch type. On verification by the jurisdictional Assistant Commissioner, it was found that the furnace used by the petitioner is only pusher type and therefore it is only a verification of furnace and therefore there is no question of giving any opportunity to the petitioner. Hence, the learned Counsel submitted that the submission of the learned Counsel for the petitioner that the impugned order was passed without giving any opportunity may not arise. However, the learned Counsel for the respondents was not in a position to dispute the legal submissions made by the learned Counsel for the petitioner as to whether the Deputy Commissioner has got the power to exercise under Section 3A(2) of the Act to pass the impugned order when the said section specifically confers the power only on the Commissioner of Central Excise.
4. Heard the submissions of the respective Counsel. Even though the petitioner has raised a question on the authority of the Deputy Commissioner to pass the impugned order under Section 3A(2) of the Act when such power has been specifically conferred only on the Commissioner of Central Excise, the impugned order is liable to be set aside on the sole ground that the petitioner has not been given opportunity to explain as to the report of the jurisdictional Assistant Commissioner who inspected the factory premises of the petitioner and submitted a report stating that the furnace used by the petitioner is of pusher type. As rightly contended by the learned Counsel for the petitioner, by the impugned order the petitioner has been deprived of his right to claim lesser liability of tax. When such entitlement of the petitioner is deprived of by the impugned order, the law requires the respondents to serve the copy of the report of the jurisdictional Assistant Commissioner on the petitioner calling for explanation, and thereafter ought to have passed the impugned order. In the absence of such opportunity to the petitioner, the impugned order is liable to the set aside. Accordingly, the impugned order is set aside and the respondents are directed to furnish the copy of the report of the jurisdictional Assistant Commissioner submitted on the basis of the inspection carried on by him in the factory premises of the petitioner to the petitioner calling for explanation and thereafter consider the same and pass appropriate orders. In view of the order in the writ petition on the above ground, I am not inclined to go into the question of competency of the Deputy Commissioner (Technical) to pass the impugned order under Section 3A(2) of the Act and left the said issue open to the parties to be decided in case any order is passed adversely against the petitioner. With the above observation, this writ petition is allowed. No costs. Consequently, connected W.M.P. is closed.