ORDER
Archana Wadhwa, Member (J)
1. The appellants are engaged in the manufacture of non-alloy steel ingots classifiable under Heading 7206.90 of the Central Excise Tariff Act, 1985. As per the facts on record, the appellants vide their letter dated 12-2-98 opted for payment of duty on the said goods in terms of the provisions of Rule 96ZO(1) of Central Excise Rules, 1944. Accordingly, the Commissioner vide his Order dated 23-3-98 fixed the Annual Capacity of Production of the Induction Furnace of the appellant company as 6,400 M.Ts. in terms of the provisions of Sub-rule 4 of Rule 3 of the Induction Furnace and Annual Capacity Determination Rules. Accordingly, the appellants were liable to pay duty @ Rs. 750.00 per M.T. on the clearance of their subject goods in terms of the Annual Capacity so fixed by the Commissioner.
2. The appellants were issued a show cause notice dated 1-11-99 alleging that during the period from April, 1999 to August, 1999, the appellants were to pay Rs. 20.00 lakh as their duty liability in terms of the Annual Capacity fixed, whereas they have deposited only Rs. 8.00 lakh. Accordingly, they were required to pay the balance amount of duty along with the interest and personal penalty.
3. During adjudication, the appellants took a stand before Commissioner that their factory suffered break-down and remained closed during the period 13-5-99 to 12-7-99. As such, they claimed abatement in terms of the said Rules, which has been denied by the Commissioner, vide his impugned order.
4. Another show cause notice dated 3-3-2000, was issued to the appellants proposing recovery of duty of Rs. 11.50 lakh on the ground that duty liability during the period from September, 1999 to January, 2000, has not been discharged in terms of the Annual Capacity fixed by the Commissioner. The appellants, during adjudication before the Commissioner, claimed that their actual production was less than the actual capacity of production fixed by the Commissioner and as such, their duty liability should be re-determined in terms of the Sub-sections (4) and (5) of Section 3A of the Central Excise Act, 1944. The above contention of the appellants was also not accepted by the adjudicating authority on the ground that the above stand of the appellant of actual production being less than A.C.P. fixed, has not been substantiated by production of evidences like RG-1 registers and RT-12 returns. Accordingly, he has confirmed the demand raised by both the show cause notices and also imposed personal penalty of equivalent amount.
5. We have heard Shri B.N. Chattopadhyay, learned Consultant for the appellants and Shri A.K. Pandit, learned JDR for the Revenue.
6. It is on record that the appellants never opted for payment of duty in terms of the provisions of Rule 96ZO(3), which requires the assessee having furnace capacity of 3 M.Ts. to pay duty on lump-sum basis of Rs. 5.00 lakh per month. They have admittedly opted for payment of duty in terms of the provisions of Rule 96ZO(1) which require the assessee engaged in the manufacture of steel ingots to debit the amount calculated @ Rs. 700.00 per M.T. at the time of clearance of ingots from his factory on the Annual Capacity of Production of his factory, as determined under the Induction Furnace Annual Capacity Determination Rules, 1997. As such, it is clear that the decision of the Hon’ble Supreme Court in the case of Commissioner of Central Excise v. Venus Castings Pvt. Ltd. reported in 2000 (117) E.L.T. 273 (S.C.), will not apply inasmuch as in that case, it was held that the appellants having opted for payment of duty in terms of the procedure, envisaged under Rule 96ZO(3) of Central Excise Rules, 1944, cannot claim the benefit of Determination of Production Capacity under Section 3A(4) of the Act. Inasmuch as the appellants have opted for payment of duty under Rule 96ZO(1), the provisions of Section 3A(4) cannot be excluded. In fact, the Supreme Court in the case of Venus Castings has observed in para 8 of their judgment that if the Annual Capacity determined by the Commissioner is disputed by the assessee, the Commissioner is required to re-determine the same, as provided in Section 3A(4). To the similar effect is another decision of the Hon’ble Supreme Court in the case of Union of India v. Supreme Steels and General Mills reported in 2001 (133) E.L.T. 513 (S.C.) wherein it was observed that Excise Duty may be charged on the basis of actual production.
7. Now, we find that alternatively mode of payment of duty on the non-alloy steel ingots is as per the provisions of Rule 96ZO(1). In terms of the said Rule, a manufacturer of non-alloy steel ingots is required to pay total amount calculated @ Rs. 750.00 per M.T. on the Annual Capacity of Production of his factory as determined under the Induction Furnace Annual Capacity Determination Rules, 1997. Section 3A(4) of Central Excise Act, 1944 is to the effect that where an assessee claims that the actual production of notified goods in his factory is lower than the production determined under Sub-section (2), the Commissioner of Central Excise shall, after giving an opportunity to the assessee to produce evidence in support of his claim, determine the actual production and determine the amount of duty payable by the assessee with reference to such actual production at the rate specified in Sub-section (3). Sub-section (5) of Section 3A is to the effect that where the Commissioner of Central Excise determines the actual production under subsection (4), the amount of duty already paid, shall be adjusted against the duty so re-determined and if the duty already paid, falls short or is in excess, the duty so re-determined, the assessee shall pay the deficiency or be entitled to a refund as the case may be. A reading of the above two Sub-sections of Section 3A show that the same enables the manufacturer to pay duty on the basis of the actual production, if the same is less than the production determined under Sub-section (3). Sub-section (2) requires Determination of the Annual Capacity of the Production, which shall be deemed to be the Annual Production of such goods by the factory in question. As such, it is seen that for finding out whether the actual production is less than the Annual Capacity of Production, it is first necessary to fix the Annual Capacity of Production in terms of the Sub-section (2) of Section 3A. As such, it cannot be said that once the Annual Capacity of Production is fixed, the appellants cannot claim entitlement to pay duty on the basis of the actual production. Subsection (4) and Sub-section (5) clearly envisage a position where the actual production is less than the Annual Capacity of Production so fixed under the provisions of Sub-section (2).
8. In the instant case, the appellants have claimed that their actual production was less than the A.C.P. fixed by the Commissioner in terms of the provisions of Sub-section (2) of Section 3A read with the relevant Rules. In this case, the provisions of Sub-sections (4) and (5) of Section 3A would come into play. However, the appellants’ stand has not been accepted by the Commissioner on the ground that they have not been able to substantiate their claim that their actual production was less than the A.C.P. fixed. On the other hand, it is the appellants’ contention that their actual production recorded in the statutory records like RG-1 registers and RT-12 returns, by them. The Commissioner instead of making the observations against them, should have called for the said records and verified their actual production. We agree with the above contention of the appellants. The figures reflected in the RG-1 records unless disputed, represents the actual production of a factory and the same are required to be accepted. Inasmuch as the Commissioner has not looked into the said records and simply dismissed the claim by observing that the said records have not been produced before him, we are constrained to remand the matter to the Commissioner for the above purposes. He is directed to look into the said records and determine the appellants’ duty liability accordingly.
9. The period for which the appellants have claimed the abatement, it is seen that the same has been rejected on the ground that the conditions for claiming the said abatement like intimation to the Revenue as regards closure of the factory and re-start of the production, have not been followed. However, it is the appellants’ contention that such intimations were duly given to their jurisdictional Assistant Commissioner, which stand acknowledged by the Office of the Commissioner. Similarly, the meter reading was also intimated and a copy of the Closure Intimation was also given to their jurisdictional Superintendent. Intimation as regards resuming of work was again submitted to the Deputy Commissioner’s Office along with the copy to the Superintendent and as such, the observation made by the Commissioner regarding non-fulfilment of the conditions for claiming abatement, is not correct. They have relied upon earlier decision of the Tribunal wherein it was held that even where the intimation was not given in time, the same cannot be made the basis for denial of abatement, where the factory was actually closed.
In view of the foregoing, we direct the Commissioner to look into the above aspects and decide the appellants’ liability accordingly.
10. We also note that the appellants have also claimed the benefit of Section 3A(4) for the period covered by the first show cause notice. Inasmuch as we have already held that such facility was available to the appellants under the provisions of Section 3A(4), we direct the Commissioner to look into the said claim of the appellants and decide the case afresh in the light of the observations made by us in the preceding paragraphs. The appeals are thus allowed by way of remand.