PUNJAB BEARING INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition has been filed with the prayer for quashing Section 3A of the Central Excise Act, 1944 (hereinafter referred to as 'the Act') and Rules and Notifications dated 1-8-1997 issued thereunder, the same being ultra vires to the Constitution and discriminatory in nature. Further prayer is for quashing order dated 6-5-2005, Annexure P. 14 passed by Commissioner, Central Excise and a direction not to levy excise duty other than on actual production and clearance of excisable goods and consequential relief of refund.

(2.) Case of the petitioner is that the petitioner is engaged in the business of manufacture of M.S. Ingots since 1986 and had been discharging liability to pay central excise duty as per actual production and after availing Modvat credit on inputs and capital goods.

(3.) Section 3A was inserted in the Act by Finance Act No. 2 with effect from 1-9-1997, which provided for levy of excise duty by determining capacity of production of notified goods. As per Notification No. 46/97, dated 1-8-1997, on non-alloy steel ingots and billets falling under sub-heading Nos. 7206.90 and 7207.90 of the Schedule to the Central Excise Tariff Act, 1985, excise duty payable is Rs. 750/- per metric tonne on the annual capacity of production determinable under the Induction Furnace Annual Capacity Determination Rules, 1997. Rule 3 of the said rules lays down the procedure for computing the capacity of production. Rule 96ZO introduced with effect from the same date by the Central Excise (Seventh Amendment) Rules, 1997 lays down procedure to be followed by manufacturer of Ingots and billets. Sub-rule (3) thereof provides for payment of lump-sum amount in full and final discharge of duty, at the option of manufacturer, subject to the condition that on giving such an option, manufacturer will not be entitled to avail of benefit under Proviso to Sub-section (3) or (4) of Section 3A of the Act.