ORDER
P.S. Bajaj, Member (J)
1. This appeal has been directed by the appellants against the impugned Order-in-Original dated 24-3-01 passed by the Commissioner of Central Excise vide which he had disallowed abatement claim for the period 15-12-97 to 27-3-98.
2. The appellants are operating an induction furnace unit in the premises situated at Kanganwal Road, Jugiana, Ludhiana. They manufacture non-alloy steel ingots/billets which are chargeable to duty in terms of Section 3A of the Central Excise Act read with Notification No. 30/97-C.E. (N.T.), dated 1-8-97, as per annual production capacity of the unit. They filed claim for abatement of duty for the period 15-12-97 to 27-3-98 by alleging that one of their induction furnace did not produce goods and remain closed during that period.
Their claim was initially decided by the adjudicating authority partly in their favour and partly against them. That order was thereafter challenged by them before the Tribunal and the same was set aside vide order dated 8-3-99. The matter was sent back to the adjudicating authority for deciding the matter afresh in accordance with law after affording an opportunity of hearing to the appellants.
3. After remand to the adjudicating authority, the appellants were served with the show cause notice for the rejection of their claim for abatement of duty for the disputed period. After getting their reply and after hearing them, the Commissioner, through the impugned order, had rejected the claim on the ground that the appellants had failed to satisfy the statutory conditions stipulated under Sub-section (3) of erstwhile Section 3A of the Central Excise Act as well as Rule 96ZO(2) of Central Excise Rules, 1944.
3. The learned Counsel has assailed the impugned order on the grounds namely (i) the Commissioner/adjudicating authority could not disallow the abatement of duty for the period for which it was earlier allowed to the appellants, (ii) the Assistant Commissioner had already allowed abatement claim of the appellants for this very period in dispute vide order dated 12-10-99 and that order could not be brushed aside by the adjudicating authority, (iii) the conditions laid down in Sub-section (3) of erstwhile Section 3A of the Central Excise Act were fully satisfied as one of the induction furnace remained closed for the disputed period, and (iv) there was no non-compliance with the provisions of Rule 96ZO(2) of the Central Excise Rules.
5. On the other hand, learned SDR has reiterated the correctness of the impugned order of the Commissioner.
6. We have heard both the sides and gone through the record.
7. The perusal of the record shows that when the abatement claim of the appellants was decided earlier by the adjudicating authority vide order dated 27-11-98 allowing part of the abatement claim up to 30 days to them they themselves challenged the validity of the said order before the Tribunal. The Tribunal in that appeal set aside the order of the Commissioner in toto after waiving pre-deposit, without leaving any part of the order unaltered. The Tribunal remanded the matter to the adjudicating authority for fresh decision. Therefore, the original order of the Commissioner stood merged with that the Tribunal’s order dated 8-3-99 vide which the appeal of the appellants was decided.
8. After remand, show cause notice was served on the appellants as the matter was ordered to be decided afresh as per direction of the Tribunal in the remand order. The appellants filed reply to that show cause notice wherein they attempted to substantiate their abatement claim by alleging that one of their unit/furnace remained closed during the disputed period continuously. And as such they were entitled to the abatement of duty for that period. After scrutinising their reply and after hearing them, the Commissioner had passed the impugned order disallowing in toto abatement claim to the appellants mainly on the ground that conditions stipulated in Sub-section (3) of erstwhile Section 3A of the Act did not stand fulfilled.
9. Sub-section (3) of erstwhile Section 3A of the Central Excise Act, reads as under :-
“(3) The duty of excise on notified goods shall be levied, at such rate as the Central Government may by notification in the Official Gazette specify, and collected in such manner as may be prescribed :
Provided that, where a factory producing notified goods did not produce the notified goods during any continuous period of not less than seven days, duly calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed.”
10. The appellants have admittedly got two induction furnaces, one of 2 MT. and other of 3 MT. According to them, induction furnace of 2 MT. remained closed during the disputed period, while other remained in operation. In view of the face of these admitted facts, it could not be said that the entire factory remain closed for the disputed period. The bare perusal of the proviso appended to Sub-section (3) of erstwhile Central Excise Tariff (sic), reproduced above, makes it abundantly clear that abatement shall be allowed only where the factory did not produce the notified goods during any continuous period of not less than seven days. The argument of the learned Counsel that each furnace/unit has to be taken as a factory, for the purpose of Sub-section (3) of erstwhile Section 3A of the Act for allowing the abatement, as ACP is determined always on the basis of each furnace/unit under the Annual Capacity Determination Rules. But we are unable to subscribe to this contention of the counsel. Under the Annual Capacity Determination Rules, capacity of each furnace has to be taken into account for determining the total ACP of the factory of the assessee. But in a case of abatement, expression used is ‘factory’ and not unit in the proviso to Sub-section (3) of erstwhile Section 3A of the Central Excise Act. The wording of the proviso to sub-section is quite clear and leaves no doubt in our mind that for the purpose of claiming abatement, the entire factory of the assessee must have remained closed for a period of not less than 7 days. Closure of one of the two units/furnaces in the factory will not be sufficient for him to claim abatement under this provision. In this view, we are also fortified by the ratio of the law laid down by the Tribunal in Doaba Rolling Mills Pvt. Ltd. v. CCE, Meerut [decided vide Final Order No. A/177/99-NB (DB), dated 17-3-99 – 1999 (107) E.L.T. 768 (T)]. In that case also, similar argument was advanced as had been done by the learned Counsel in the present case that closure of one of two units of the factory should be taken to be closure of entire factory for the purpose of Sub-section (3) of erstwhile Section 3A of the Act but the same was rejected by the Tribunal and it was observed as under : –
“Therefore, we are unable to accept the contention of the learned Counsel that abatement is to be granted furnacewise. The reliance by the Counsel of affixing of annual capacity of production independently for each furnace does not advance the appellants case in view of the fact that total annual production capacity has been taken as only one figure and further, the language of the proviso is very clear that abatement is permissible only if the factory does not produce notified goods.”
11. No help can also be sought by the Counsel from the order of the A.C. dated 12-10-99 who allegedly allowed abatement of duty for the disputed period to the appellants. This order became non-existent after service of fresh show cause notice on the appellants after remand of the case by the Tribunal. No reference was even made by the appellants themselves to that order of the A.C. during the adjudication of the fresh show cause notice, before the Commissioner. Since the very conditions stipulated in Sub-section (3) of erstwhile Section 3A of the Act, did not stand fulfilled as the entire factory of the appellants did not remain closed for the disputed period and what was closed was only one furnace, the abatement claim of the appellants had been rightly rejected by the adjudicating authority. We find no illegality or legal infirmity in the impugned order of the adjudicating authority in this regard.
12. We also do not find any sufficient ground to disagree with the findings of the adjudicating authority that even requirements of Rule 96ZO(2) of the Central Excise Rules, were not complied with by the appellants for having failed to file any continuous closure certificate of their factory as required under the said rule.
13. In view of the discussions made above, the impugned order of the adjudicating authority/Commissioner, is upheld. Therefore, the appeal of the appellants is dismissed.