V.K. Agrawal, Member (T)
1. M/s. Steel Industries of Hindustan have challenged the demand of duty and penalty confirmed against them by the Commissioner Central Excise (Appeals) under the impugned Order.
2. Shri Rajesh Chibber, learned Advocate, submitted that the Appellants manufacture Re-rolled products which attracted Central Excise duty under Section 3A of the Central Excise Act during the relevant period; that during the period from April 1998 to March 1999 their factory remained closed at different periods and some time for more than 15 days; that accordingly they had not deposited the amount of duty under the belief that they were eligible to the abatement of duty on account of closure of factory under Sub-section (3) of Section 3A of the Central Excise Act, read with Rule 96ZP of the Central Excise Rules, 1944; that they had filed abatement claims from time to time with the competent authority; that, however, they were issued a show cause notice proposing demand of duty on the ground that during April 1998 to March 1999 they were required to pay duty amounting to Rs. 22.70 lakhs whereas they had paid only Rs. 9,24,611 and accordingly they were asked to pay the differential duty which has been confirmed by the Additional Commissioner under Order-in-Original No. 15/2002 dated 7.5.2002 which has been upheld by the Commissioner (Appeals) under the impugned Order on the ground that the duty was payable on monthly basis which has not been discharged by them. The learned Advocate, further, submitted that the abatement claim filed by them has been remanded by the Appellant Tribunal to the proper authority for consideration the same and as their claim for abatement is still pending with the Department, duty ought not to have been confirmed against them; that as per Circular No. 331/47/97-CE dated 30.8.97, if an Induction Furnace unit is continuously closed for not less than 15 days then the pre-payment of duty for the closure period is not to be insisted upon provided the unit fulfills all the conditions stated in Sub-rule (2) of Rule 96ZO of the Central Excise Rules, 1944. He contended that as their factory had remained closed for some time for more than 15 days they were not required to discharge the duty liability and then claim the abatement. The learned Advocate also relied upon the decision in the case of CCE, Chandigarh-II v. Dedar India Pvt. Ltd., 2003 (55) RLT 134 (CEGAT) wherein the Tribunal has held that the Commissioner must decide the eligibility of the Respondents to the abatement from payment of duty and then decide the liability of the assessee. Reliance has also been placed on the decision in the case of CCE, Meerut-1 v. Aradhna Steels and Alloys Industries P. Ltd., 2004 (62) RLT 22 (CEGAT) wherein the Tribunal has held that the Commissioner must decide the eligibility of the Respondents to the abatement from payment of duty and then decide the liability of the assessee. Reliance has also been placed on the decision in the case of CCE, Meerut-1 v. Aradhna Steels and Alloys Industries P. Ltd., 2004 (62) RLT 22 (CESTAT). The learned Advocate thus claimed that in view of these decisions of the Tribunal, the Commissioner should be directed to first decide the abatement claim filed by them before the duty is demanded from them.
3. Countering the arguments Shri O.P. Arora, learned SDR, submitted that as per provisions of Rules relevant at the time, the Appellants were required to pay duty in two equal instalments in a calendar month; that first instalment was to be paid latest by 15th of the month and the second instalment by last day of the month; that as such Appellants were required to discharge the duty liability first and then claim the abatement under the provisions of Rule and the same would be decided by the competent authority subject to the fulfilment of the conditions stipulated in the Act and the Central Excise Rules; that it is not open to the Appellants themselves to discharge the duty liability after deducting the amount of abatement which may be claimed by them. He also mentioned that in Didar Steel case the Tribunal has clearly observed that the abatement of payment of duty is available on the fulfilment of all the conditions specified in Central Excise Act; that neither Section 3A(3) of the Act nor Rule 96ZO of the Central Excise Rules empowers the Appellants to take the abatement on their own before making the payment of duty. He finally mentioned that it is not the case of the learned Advocate that the factory was closed all the times for more than 15 days and even in cases where the factory was closed for more than 15 days it is not known at the initial stage to the Appellants that the factory is going to be closed for more than 15 days and as such they have to discharge the duty on the fortnightly basis as provided in the Rules.
4. We have considered the submissions of both the sides. Under Rule 96ZP duty is required to be paid by 10th of each month. Proviso to Sub-section (3) of Section 3A provides that where a factory producing notified goods did not produce the notified goods during any continuous period of not less than 7 days, duty shall be abated, if the manufacturer fulfills such conditions as may be prescribed. The conditions for the purpose of abatement of duty has been prescribed in Rule 96ZP(2) according to which the abatement will be allowed by an Order passed by the Commissioner of Central Excise subject to the fulfilment of the conditions that the manufacturer shall inform in writing about the closure to the Asst. Commissioner with a copy to the Suptd. either prior to the date of closure or on the date of closure along with the reading of the electricity meter and closing balance of stock of Hot Re-rolled products of non-alloy steel. Similarly when the manufacturer starts manufacture again, the manufacturer shall inform in writing about the starting of production either prior to the date of starting production or on the date of staring production along with closing balance of stock on re-starting the factory and electricity meter reading. He has also to file a declaration at the time of restarting of the factory. Thus abatement of duty for the period the factory had remained closed is available to a manufacturer only on fulfilment of the conditions stipulated in Rule 96ZP(2) and on being allowed by the Commissioner. The learned SDR has rightly emphasized that the Appellants in the present matter have themselves availed of the abatement as the less duty has been deposited by them which is not permissible under the law. The Appellants are, therefore, required to deposit the entire amount of duty which has been determined as per provisions of Rule 96ZP. As and when claim for abatement of duty is allowed they will be eligible to seek refund of the duty. The Tribunal even in the decision in the case of Didar Steel Complex has held that though “neither the Section 3A(3) nor Rule 96ZO empowers the assessee to take abatement on his own before making the payment of duty.” The Board’s Circular dated 30.8.97 cannot be made applicable as on query from the Bench the learned Advocate could not mention the periods when the factory of the Appellants had remained closed for more than 15 days. We, therefore, hold that the Appellants are liable to discharge the duty liability determined under the provisions of Section 3A read with Rule 96ZP of the Central Excise Rules, 1944. Penalty is also imposable on the Appellants as they had not discharged the duty liability cast upon them. However, taking into consideration the facts of the case we reduce the penalty to Rs. 2 lakhs. But for this modification the appeal is rejected.