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2009 Supreme(P&H) 138
PUNJAB & HARYANA HIGH COURT
M.M.Kumar and H.S.Bhalla JJ.
N.K.H.Alloys
Versus
Commissioner Of C. Ex., Chandigarh-i
G.C.R. No. 1 of 2004,
Decided On : JANUARY 19, 2009
Duty of excise can only be levied on goods produced or manufactured, and minor lapses in compliance with procedural requirements should not result in the rejection of abatement claims.
Headnote:
Central Excise Act - Duty of Excise - Section 3, Rule 96ZO - The court addressed the issue of levying excise duty on goods not actually manufactured and the duty of excise on account of failure to comply with procedural requirements. The court found in favor of the Assessee based on the provisions of Section 3 of the Act and previous rulings.
Fact of the Case:
The petitioner, engaged in manufacturing steel ingots and casting, claimed abatement of duty under the Compounded Levy Scheme. The claim was rejected due to a delay in intimating the electricity meter reading.
Finding of the Court:
The court found that the rejection of the abatement claim for a minor lapse was not sustainable in the eyes of the law, as duty could only be levied on goods produced or manufactured.
Issues: The issues involved the rejection of abatement claim due to a delay in intimating the electricity meter reading and the interpretation of the provisions of the Central Excise Act.
Ratio Decidendi: The court held that duty could only be levied on goods produced or manufactured, and a minor lapse in compliance with procedural requirements should not result in the rejection of the abatement claim.
Final Decision: The court ruled in favor of the Assessee, stating that duty could not be imposed due to the closure of the unit and the minimal electricity consumption, and disposed of the matter accordingly.
M.M.Kumar, J.
1. On a petition filed under Section 35 H(l) of the Central Excise Act, 1944, by the Assessee, this Court has issued directions on 27-11-2001 [2002 (140) E.L.T. 376 (P&H)] to the Customs, Excise and Service Tax Appellate Tribunal (for brevity #24;the Tribunal#25;) to state facts of the case and refer the following questions of law for determination of this Court :-
(1) Whether the excise duty on goods not actually manufactured can be levied and collected Under Rule 96ZO of the Central Excise Rules, 1944 when the duty is levied under Section 3 of the Central Excise Act, 1944 on the goods produced or manufactured. (2) Whether duty of excise can be levied and collected simply on account of failure of Applicant to strictly comply procedural requirement.
2. At the hearing, we find that the aforesaid questions have already been answered in favour of the Assessee and against the revenue by two Division Benches of this Court in the cases of Commissioner, Central Excise Commissionerate, Ludhiana v. M/s Shiv Durga Ispat, Ludhiana (Punjab) (CEA No.63 of 2006, decided on 27-10-2006) and Commissioner of Cental Excise, Ludhiana v. Ralson India Ltd . - 2006 (202) E.L.T. 759 (P & H).
3. In order to appreciate the controversy in hand, few facts may be noticed. The petitioner is engaged in the manufacturing of Steel Ingots and Steel casting. Under Section 3-A of the Central Excise Act, 1944, the Government has power to levy and collect duty on any product according to the production capacity of the Assessee. The scheme is known as #24;Compounded Levy Scheme#25; which was introduced w.e.f. 1-8-1997 by including manufacturer of Steel Ingots and Billets. A notification in that regard dated 1-8-1997 read with Rule 96ZO of the Central Excise Rules, 1944 was issued. The notification provided that if the factory remains closed for not less than 7 days, then the Assessee becomes entitled of abatement of duty in terms of Rule 96ZO(2). The Rule 96ZO(2) reads as under :-
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 of 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, 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; (d) 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).
4 The petitioner has claimed that the unit was closed by it on 16-1-1998 at 18 hours. In that regard, a intimation was sent on 16-1-1998 itself, which was duly acknowledged by the office of the Assistant Commissioner of Central Excise (P-1). The position of stock was also i
