REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2715 OF 2003
M/s Hans Steel Rolling Mill .....Appellant
vs.
Commnr. of Central Excise, ....Respondent
Chandigarh
WITH
CIVIL APPEAL NO. 2717 OF 2003
WITH
CIVIL APPEAL NO. 3988 OF 2003
JUDGMENT
Dr. MUKUNDAKAM SHARMA, J.
1. The issue that falls for consideration in these appeals is, as
to whether the provisions of time limit that are contained in
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Section 11A of the Central Excise Act, 1944 (in short `the
Act’) are applicable to the recovery of amounts due under the
compound levy scheme for Hot-Re-rolling mills, under the
Annual Capacity determination Rules 1997 because
otherwise, it is a separate scheme for the collection of Central
Excise Duty for the goods manufactured in the country.
2. In order to record a definite finding on the aforesaid issue it
would be necessary to set out certain facts leading to filing of
the present appeals.
3. The appellants are engaged in the manufacture of iron and
steel products falling under Chapter 72 and 73 of the Central
Excise Tariff Act, 1985. During the period ranging from
01.09.1997 to 31.3.2000, the goods manufactured by the
appellants were chargeable to Central Excise Duty in terms
of Section 3A of the Act. As per the Act, the duty was
suppose to be paid on the annual production capacity of the
plant, irrespective of the actual production. Under the
scheme of Section 3A, the payment of duty to be under Rule
96ZP of the Central Excise Rules. The Hot-Re-rolling Steel
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Mills Annual Capacity Determination Rules, 1997 were
introduced by notification no. 32/97-CE (NT) dated
01.08.1997, wherein the manner and procedure for
determination of annual capacity of rolling mill was provided.
On 27.04.1998, the Commissioner of Central Excise
determined the Annual Capacity to be 3355 MT.
4. Being aggrieved by the determination made, the appellants
filed an appeal before the Customs, Excise & Gold (Control)
Appellate Tribunal, (in short `the Tribunal’) New Delhi,
whereby and whereunder the Tribunal remanded the matter
back to the Commissioner for the re-determination of the
value.
5. A show cause notice was issued to the appellants on
03.11.1998, contending that the demand of the duty has to
be based on the capacity determination of 3355MT, for which
the recovery of duty under Section 11A of the Act amounting
to Rs 2,19,750.00 was to be made.
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6. On 11.12.1998, the appellants changed the parameters of
their re-rolling mill and applied for the re-determination of
the annual capacity for fresh declaration in terms of Capacity
Determination Rules. On 31.05.1999, the Commissioner
passed an order based on Rule 5 of the Capacity
Determination Rules stating the capacity as 1890MT. During
the pendency of the final re-determination, the Central
Excise Department issued a demand notice under Section 11
of the Act, for recovery of duty. Aggrieved by the same, the
appellants filed a writ petition before the Punjab and
Haryana High Court, whereby and whereunder the High
Court set aside the demand notice and directed the revenue
to re-determine the annual capacity.
7. On 04.01.2001, the Commissioner of Central Excise re-
adjudicated the matter and determined the annual capacity
of the period 1.09.97 to 31.3.2000 to be 1890MT. The
appellant filed an appeal before the Tribunal against the
same. On 08.04.2002, the larger bench of the Tribunal, held
that in case of the manufacturer operating under Compound
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Levy Scheme in terms of Section 3A of the Act, and Rule
96ZP of the Central Excise Rules, recovery mechanism
provided in terms of Section 11A of the Act is not to be
followed and hence the matter was to be remanded back to
the Commissioner for re-determination.
8. Still aggrieved the appellants filed the present appeals on
which we heard the learned counsel appearing for the
parties, who have taken us through various orders passed by
the different authorities and also through other connected
records. Having considered the same, we proceed to dispose
of the present appeal by recording our reasons for our
conclusion.
9. It was submitted by the counsel appearing for the appellants
that the provisions of Section 11A of the Act are mandatory
for recovery of any duty short levied and short paid. The
learned counsel for the petitioner further contended that the
Section 11A of the Act stipulates the procedure to be followed
invariably and without exception for recovery of any duty
which has not been levied or not paid or short paid or
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erroneously refunded. The counsel referred to sub Section (2)
of Section 11A of the Act which stipulated that the
determination of amount of duty short levied etc, from a
person is to be made after considering his representation in
the matter. In this case since the recovery proceedings have
been initiated under Section 11 of the Act, the procedural
requirements for issuing notice, determining the amount etc,
have not been satisfied at all. The counsel further submitted
that there is no exception in the Central Excise Act or Rules
regarding the procedure of recovery.
10. The aforesaid submissions of the counsel appearing for the
appellants were however refuted by the counsel appearing for
the respondent. The learned counsel for the respondent has
pointed out that under the Compound Levy Scheme, the
appellants opted for the payment of duty at compounded
rates and filed declarations furnishing details about annual
capacity of production and duty payable on such capacity of
production. Once the commissioner approved such
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applications, payments are to be made in terms of Rule 96ZP
of the Rules.
11.We have already set out the issue which falls for our
consideration in these present appeals.
12.On going through the records it is clearly established that
the appellants are availing the facilities under the Compound
Levy Scheme, which they themselves, opted for and filed
declarations furnishing details about annual capacity of
production and duty payable on such capacity of production.
It has to be taken into consideration that the compounded
levy scheme for collection of duty based on annual capacity
of production under Section 3 of the Act and Hot Re-rolling
Steel Mills Annual Capacity Determination Rules, 1997 is a
separate scheme from the normal scheme for collection of
central excise duty on goods manufactured in the country.
Under the same, Rule 96P of the Rules stipulate the method
of payment and Rule 96P contains detailed provision
regarding time and manner of payment and it also contains
provisions relating to payment of interest and penalty in
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event of delay in payment or non-payment of dues. Thus, this
is a comprehensive scheme in itself and general provisions in
the Act and Rules are excluded.
13. The judgments of this court in the cases of Commissioner of
C. EX & Customs v. Venus Castings (P) Ltd as reported in
2000 (117) ELT 273 (SC) and, Union of India v. Supreme
Steels and General Mills as reported in 2001 (133) ELT
513 (SC), has clearly laid down the principle that the,
compound levy scheme is a separate scheme altogether and
an assessee opting for the scheme is bound by the terms of
that particular scheme. It is settled matter now that Section
11A of the Act has no application for recovery under different
schemes.
14. In the case of Collector of Central Excise, Jaipur V.
Raghuvar (India) Ltd as reported in 2000 (118) ELT 311
(SC), this court has categorically stated that Section 11A of
the Act is not an omnibus provision which stipulates
limitation for every kind of action to be taken under the Act
or Rules. An example can be drawn with the Modvat Scheme,
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because even in that particular scheme, Section 11A of the
Act had no application with regard to time limit in the
administration of that scheme.
15.We are in agreement with the finding and decision arrived at
by the Tribunal that the importing of elements of one scheme
of tax administration to a different scheme of tax
administration would be wholly inappropriate as it would
disturb the smooth functioning of that unique scheme. The
time limit prescribed for one scheme could be completely
unwarranted for another scheme and time limit prescribed
under Section 11A of the Act is no exception.
16.Accordingly, in view of the above, we find no merit in these
appeals which are dismissed herewith but without costs.
……………………………………, J
(DR. MUKUNDAKAM SHARMA)
………………………………………,J
(ANIL R. DAVE)
NEW DELHI;
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MARCH 10, 2011.
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