ANJU STEELS PVT. LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of non -alloy steel ingots falling under S.H. 7206.90 of the Central Excise Tariff Schedule. The period of dispute in this case is April to September 1999. The appellants had a furnace of 3 M.T. capacity during the said period. During a part of the said period, i.e. 10.4.99 to 16.6.99, they had also an additional furnace of 1 M.T. capacity. In respect of the 3 M.T. capacity furnace, they had filed declaration dated 15.9.97 w.e.f. 1.9.97and, in respect of the additional furnace, they filed declaration dated 15.4.99. Under the provisions of Rule 96 ZO(3) of the Central Excise Rules, 1944 read with Sub -section (3) of Section 3A of the Central Excise Act, the appellants were liable to pay duty @ Rs. 5 lakhs p.m. in respect of the 3 M.T. capacity furnace. The total duty liability in respect of this furnace for the period of dispute (6 months) was accordingly Rs. 30 -lakhs. On a pro rata basis, the total duty liability in respect of the 1 M.T. capacity furnace for the relevant period worked out to Rs. 3,72,223. As the appellants failed to discharge their duty liability for the said period of six months, the department issued show -cause notice to them demanding the total duty amount of Rs. 33,72,223 (alongwith interest thereon) as also proposing to impose penalty on them for contravention of Rule 96ZO(3). The party contested the show -cause notice on various grounds. The main ground raised by them was that their actual annual production was far below the annual capacity of production determined by the Commissioner and that the show -cause notice should not have been issued till their application to the Commissioner for refund of the "excess duty paid by them on actual production basis" was disposed of. The original authority confirmed the above demand of duty with interest and also imposed on them a penalty of Rs. 33,72,223 under Rule 96ZO(3) of the Central Excise Rules, 1944. The appeal preferred by the aggrieved party to the Commissioner (Appeals) did not succeed. The lower appellate authority, following the Supreme Court's judgment in the cases of CCE v. Venus Castings (P) Ltd., 2003 (69) ECC 1 (SC) : 2000 (117) ELT 273 (SC), and Union of India v. Supreme Steels and General Mills, 2001 (75) ECC 225 (SC) : 2001 (133) ELT 513 (SC), held that as the appellants had opted for full and final payment of central excise duty under the provisions of Rule 96ZO(3) and had duly filed declarations of furnace capacity, they were liable to discharge duty liability in terms of Rule 96ZO(3) and had no right to claim that they could pay duty on the basis of actual production in terms of Sub -section (4) of Section 3(A) of the Act. Hence, the present appeal.

(2.) WE have examined the records and heard both the sides.

(3.) LD . Counsel for the appellants submitted that, as early as on 31.3.98, they had opted out of the Compounded Levy Scheme and proposed to pay Central Excise duty on the basis of actual production under Sub -section (4) of Section 3A of the Central Excise Act. The total amount of duty paid till that time under the above scheme was far in excess of the amount of duty payable on the basis of actual production and, therefore, a refund claim was filed with the department for refund of the excess duty. It was during the pendency of the said refund claim that the show -cause notice in question was issued. In a reminder dated 11.8.99, the appellants had requested the Commissioner of Central Excise for a decision on their refund application. In that letter, they had also pleaded for redetermination of duty liability in terms of Sub -sections (4) and (5) of Section 3A ibid. These pleas were also ignored by the Commissioner. Pending the refund claim and the connected requests of the appellants, the department should not have issued the subject show -cause notice. Referring to the impugned order, Ld. Counsel submitted that the Ld. Commissioner (Appeals) had misinterpreted the Supreme Court's decision in Venus Castings (supra) and Supreme Steels and General Mills (supra). According to the counsel, it was permissible for the appellants to opt out of the Compounded Levy Scheme prospectively.