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2004 DIGILAW 697 (RAJ)

Union of India v. M/S. Nakoda Steel Mills

2004-04-29

O.P.BISHNOI, RAJESH BALIA

body2004
JUDGMENT 1. - Heard learned counsel for the applicant. None has appeared for the respondents to contest the application in spite of service. 2. This is an application under Section 35H(1) of the Central Excise Act, 1944 (in short "the Act of 1944") for directing the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (in short 'CEGAT') to state the case and refer the following question of law said to be a substantial question of law arising out of its order dated 11th April, 2002: "Under Section 3A of the Central Excise Act, 1944 (during the relevant time) and the Hot Re-rolling Mills Annual Capacity Determination Rules, 1977, whether the Commissioner, Central Excise can re-determine the Annual Capacity Production of a mill under Rule 5 of the Annual Capacity Production Rules, 97 or not?" 3. The respondent-assessee has set up industry for manufacture of Hot Re-rolled products in 1997 and has obtained the procedure provided under Rule 96ZP read with Section 3A of the Central Excise Act, 1944 as was in force at the relevant time. For implementation of Compound Levy Scheme only envisaged that the Rule 97 had also been framed in the Rules of 1997 read with Rule 96ZP The Annual Capacity Production of the units set up by the respondent was determined by the Commissioner in the first instance, at the relevant time the Annual Production Capacity was determined by considering the machines set up by the respondent to be using batch type furnace, which are manually operated. 4. From 6th February, 1998 the respondent has replaced pusher type furnace through power and the assessee had applied in January, 1998 for 2s redetermination of his Annual Production Capacity on the basis of which the composition Duty under the Rules of 1997 read with Rule 96ZP of the Rules of 1944 was to be paid. On this application by order dated 25th March, 1998, the Commissioner re-determined the Annual Production Capacity of the unit on the basis of which composition amount was to be charged from the assessee as Excise Duty under Section 3A read with the Rules of 1997 and Rule 96ZP of the Rules of 1944. From 6th February, 1998 the assessee paid the composition duty on the basis of re-determined Annual Production Capacity. 5. From 6th February, 1998 the assessee paid the composition duty on the basis of re-determined Annual Production Capacity. 5. The earlier determination of Annual Production Capacity of the assessee unit on the basis of batch furnace used by the unit, which were manually operated, was made on 29.9.97. 6. Thereafter, on 27th March, 1999 a show cause notice was issued by the Commissioner proposing to re-determine the Annual Production Capacity of the unit in question for the period between 1st September, 1997 to 5th February, 1998 by considering the furnace used prior to 6th February, 1998 also to be pusher furnace operated through power. The show cause notice was challenged by the assessee before the Tribunal. The Tribunal vide its order dated 21.7.99 remanded the case to the Commissioner by directing him to visit the factory premises of M/s. Nakoda Steel Mills Pvt. Ltd., Bhilwara personally along with two technical experts. 7. In pursuance thereof by its order dated 6th January, 2000, the Commissioner by a detailed order came to the conclusion that looking to the design of the machines used and the material to be fed in the furnace was pushed through a screw/rod, even though manually, and moved intermittently so while being heated the furnace installed in the factory of the assessee could be termed as a pusher type furnace only. Use of power to handle the pushing system would not change the character of the furnace as the law 1 does not differentiate the pusher furnaces operated manually and the ones operated with the aid of power. 8. With these findings, the Commissioner vide his order dated 6.1.2000 re-determined the Annual Capacity Production in the year 1997-98 at 3088 s MT and confirmed the demand of Central Excise Duty amounting to Rs. 2,00,50R/- along with the interest. The source of action was referred to the power of the Commissioner u/s. 11A of the Act of 1944. 9. Against the aforesaid order, the assessee preferred an appeal before the CEGAT. 10. The CEGAT allowed the appeal by holding that the Commissioner has no power to review his own order with regard to re-determination of Annual Capacity Production. There being no specific provision of review under the Act. 11. According to the submission of the assessee, it has not suppressed any kind of material. 10. The CEGAT allowed the appeal by holding that the Commissioner has no power to review his own order with regard to re-determination of Annual Capacity Production. There being no specific provision of review under the Act. 11. According to the submission of the assessee, it has not suppressed any kind of material. In fact, there is no finding by the Commissioner either that earlier determination of Annual Capacity Production was incorrect because there was suppression of material fact on the part of the assessee. 12. In the aforesaid circumstances, we are of the opinion that though the question of law suggested by the assessee does arise out of the Tribunal's order about the competence of the Commissioner to re-determine his earlier order. However, so far as the period governed by show cause notice in respect of which the demand has been confirmed i.e. from 1st September, 1997 to 5th February, 1998 on the basis of finding recorded by the Commissioner himself is clearly barred by time u/s 11A itself. At the relevant time, Section 11A with reference to which the power has been exercised by the Commissioner and to repel challenge to his authority, only provision on which the Commissioner could rely on in support of his jurisdiction to re-determine the 'Annual Capacity Production' provided a period of 6 months only from the relevant date within which the show cause notice could be issued in the cases except where action is initiated on being satisfied about the escapement of duty or short levy of duty by reason of fraud, collusion or any wilful mis-statement or suppression of material facts. The period has since been enhanced to one year vide amendment made through Finance Act, 2000 w.e.f. 12.5.2000. 13. In the present case, no case is made out nor any satisfaction about fraud, collusion or wilful mis-statement appears to be foundation of issuing show cause notice, to claim extended period of limitation. 14. The show cause notice for the period in question is not only beyond the period of six months from the relevant date when it was issued, but is also beyond the period of one year with effect from relevant date of 5th February, 1998 and determination dated 29.8.97, which was sought to be reopened. 14. The show cause notice for the period in question is not only beyond the period of six months from the relevant date when it was issued, but is also beyond the period of one year with effect from relevant date of 5th February, 1998 and determination dated 29.8.97, which was sought to be reopened. Therefore, considering the question about jurisdiction of the Commissioner to review, the determination of Annual Production Capacity would be a futile exercise so far as the result of this case is concerned. 15. We may further notice the futility of the exercise in the present case in view of the fact that Section 3A and the Rules of 1997 and Rule 96ZP of the Rules of 1996 have since been omitted from the statute book w.e f. 11 5.2001 vide Finance Act, 2001. 16. In view of our above conclusion, we decline to grant the application. 17. The application is, therefore, rejected with no order as to costsApplication Rejected. *******