ORDER
R.K. Abichandani, J. (President)
1. The appellant, who had opted for the special procedure under Rule 96-ZA of the Central Excise Rules, 1944, and who allegedly did not pay Central Excise Duty for the period after 31st December, 1997 @ Rs. 7,500/- per month, challenges the order of the Commissioner (Appeals) made on 31st March, 2001, upholding the order-in-original by which a total demand of Rs. 82,500/- under four show cause notices for different periods was confirmed under Rule 96-ZB read with Section 11-A of the Central Excise Act, 1944, and a penalty of the like amounts imposed under Rules 173Q, 209 and 96-ZE of the Rules.
2. The appellant was engaged in the manufacture of Aluminium Circles falling under chapter sub-heading No. 7606.20. The application of the appellant for removing their product under Rule 96-ZA was granted on 18.12.1997 for the period from 19.12.1997 to 30.11.1998. The duty was paid @ Rs. 7,500/- per month as per the Notification No. 33/97 dated 30.05.1997. The appellant paid only Rs. 3,750/- for the period from 19.12.1997 to 31.12.1997 and thereafter did not furnish any account of production nor paid any duty as required under Rule 96-ZB. Thereafter, different show cause notices were issued from time to time, on 09.03.1998 (for January and February, 1998); 11.09.1998 (for March to May, 1998); 22.09.1998 (for June to September, 1998); and 24.12.1998 (for October and November, 1998). The total amount demanded under these notices came to Rs. 82,500/-.
3. As per the defence reply of the appellant, their electricity power supply was disconnected by the Electricity Board from 21st February, 1998 and, therefore, the appellant could not avail of the facility of Rule 96-ZA. According to them, intimation was sent to the Department along with a copy of the disconnection order of the Electricity Board, and they were, therefore, entitled to the concession of Rule 96-ZGG of the said Rules.
4. The learned Authorized Representative for the appellant has contended that, the authorities below have committed an error in rejecting the plea of the appellant that the electricity power supply was disconnected from 21st February, 1998. It was submitted that, in the absence of electricity power supply, no production could have taken place. Moreover, the appellant was entitled, on closure, to take the benefit of Rule 96-ZGG of the said Rules. It was further argued that, penalty could not have exceeded Rs. 2,000/- in respect of each of the show cause notices, in view of the provisions of Rules 96-ZA and 96-ZE read with Rule 173A(ii) of the said Rules.
5. It is evident from the record that, the appellant had taken up the defence that their power supply was disconnected since 21st February, 1998. This plea was rejected on the ground that, prior to the personal hearing, attended before the Commissioner (Appeals), the Department was not told that the power supply was disconnected since 21st February, 1998. It was also rejected on the ground that, the disconnection order issued by the Electricity Board, indicated discrepancy in the date of the order and the date below the signature contained in the order. It was also held that, no intimation was received by the Department about the closure.
6. The record indicates that, an intimation was sent to the concerned authority, under Certificate of Posting on 25.02.1998, clearly mentioning that the production had stopped because the electricity supply was disconnected. It is not the case of the Revenue that this document was a forged document. Merely because the Revenue Authorities were not able to trace out the said communication from their record, it cannot be assumed that it was not sent under the Postal Certificate. Furthermore, the fact that electricity supply was disconnected, was also stated on oath in the affidavit, which was filed by the appellant on 09.10.2000. Even the affidavit subsequently filed contained the statement on oath that the power supply was disconnected on 21st February, 1998. The order disconnecting power supply mentions that, since the past dues were not paid up, the power supply was cut off. The proper authority had put signature, below which the date written is 21.01.1998. However, at the top, date of checking report is written as 21.02.1998. It is recorded in this order that, the bill for the month of February, 1998 was outstanding and since payment was not made, the power supply was cut off. Since there is mention of the bill of February, 1998, obviously the order was issued on 21st February, 1998 in respect of the bill which was already issued in that month, which would have covered the past dues, as mentioned in the order. The discrepancy occurring in the date put below the signature of the proper officer, cannot work to the disadvantage of the appellant unless it was proved that the disconnection order was a forged one. No such allegation has been made, and on perusal of the photo copy of the disconnection order, apart from the discrepancy in the date below the signature, there is nothing that would indicate that it was a forged order. The order was issued in the prescribed form and contains the necessary particulars, which were written in hand. No effort was made by the Department to ascertain from the Electricity Board the genuineness of this order, nor was the appellant given any chance, during the course of the hearing, to explain the discrepancy or get it explained by summoning a witness from the Board. The cumulative effect of the letter dated 25.02.1998; the order disconnecting the electricity supply made on 21.02.1998; the affidavit of the appellant; and the defence version disclosing that the power supply was disconnected, were sufficient to accept the version of the appellant about the stopping of the production due to electricity power supply being cut off. No effort was ever made by the Revenue to physically verify from the factory, whether the production was continuing or whether the power supply was cut off.
7. Under Rule 96-ZGG, provision is, inter alia, made regarding factories ceasing to work as per which, where a manufacturer who had availed himself of the special provisions contained in Section (vi) ceased to work, the duty payable by him in the month during which he has availed himself of the special provisions, shall be calculated on the basis of the maximum number of cold rolling machines installed during the last month in the manner prescribed in Rule 96-ZF and the amount already paid for the month in accordance with Rule 96ZB shall be adjusted towards the duty so calculated. On the facts established, the appellant was clearly entitled to the benefit of Rule 173GG on the footing that the factory had closed from 21.02.1998. The appellant had paid duty only upto 31st December, 1997. Therefore, the duty was payable for the month of January, 1998 and, thereafter, again for February, 1998, during which month the production was stopped from 21st February, 1998. For the month of February, 1998, duty was payable on the basis of the number of cold rolling machines which were installed in the last month i.e January, 1998. Admittedly, only one machine was installed. Therefore, duty was payable @ Rs. 7,500/- per month for each of the months of January and February, 1998, i.e total amount of Rs. 15,000/-, with interest for the delayed payment.
8. The authorities below have imposed penalties totalling Rs. 82,000/- under Rules 173Q, 209 and 96-ZE of the said Rules. It appears from the provisions of Rule 173A(ii) that provisions of Chapter VII-A, which included Rule 173-Q, did not apply to a manufacturer who had been allowed to discharge his duty liability, inter alia, in accordance with the provisions contained in Section E-VI of Chapter V of the said Rules. Obviously, therefore, no penalty could have been imposed under Rule 173-Q against the appellant, who was allowed to discharge its duty liability under the provisions contained in Section E-VI of Chapter V, more particularly, Rule 96-ZA and 96-ZB thereof. Furthermore, Rule 96-ZA(1) laid down that, special provisions contained in Section E-VI were to apply to the manufacturer, whose application under the said Section was granted, in substitution of the provisions contained elsewhere, for the period in respect of which the application was granted. Obviously, therefore, the provisions contained elsewhere under the Rules than those contained in Section E-VI of Chapter V, could not be invoked against the appellant, and accordingly, neither Rule 173-Q nor Rule 209 could have been invoked. This conclusion is fortified from the specific provision made under Rule 96-ZE for imposition of penalty which may not exceed Rs. 2,000/-, in cases where a manufacturer commits a breach of any of the conditions specified in any Notification issued under Rule 96-ZB. In the present case, the allegation against the appellant was that, it had committed breach of the condition of the said Notification which required monthly payment of Rs. 7,500/- on the basis of one machine installed, and, therefore, since the application for special provisions had been granted in accordance with Rule 96-ZA(1) of the Rules, penalty under Rule 96-ZE(iii), could not have exceeded Rs. 2,000/-. Accordingly, in respect of each of the show cause notices relating to the period prior to the date of closure on 21.902.1998, penalty could not have exceeded Rs. 2,000/- and total penalty of Rs. 4,000/- alone could be imposed. The order imposing total penalty of Rs. 82,000/- cannot, therefore, be sustained.
9. It is accordingly ordered that the appellant shall pay a total duty amount of Rs. 15,000/- under Rule 96-ZB of the said Rules read with Section 11-A of the said Act along with interest due thereon under Section 11-AA of the Act and shall also pay the reduced penalty of a total amount of Rs. 4,000/- (rupees four thousand only). The impugned order is accordingly modified and the appeal is partly allowed.
(Dictated and pronounced in the open court)