MALHOTRA INDUSTRIAL Vs. CESTAT, NEW DELHI

JUDGEMENT

(1.) This order will dispose of C.W.P. No. 4806 of 2005 and C.E.C. No. 3 of 2006, as common questions of law and fact are involved.

(2.) The facts have been noticed from C.W.P. No. 4806 of 2005.

(3.) The assessee herein is having a rolling mill and is engaged in manufacture of iron and steel products classifiable under Chapter 72 of the Central Excise Tariff Act, 1985. In the year 1997, the Central Government introduced Compounded Levy Scheme for payment of excise duty on certain goods. As a result thereof Section 3A was introduced in the Central Excise Act, 1944 (for short, the Act'). Under the scheme of compounded levy of duty, excise duty was payable on the capacity of production and not on the basis of actual production, as is provided for under Section 3 of the Act. The new system of payment of excise duty as per the compounded levy scheme came in force w.e.f. 1-9-1997. In addition to the insertion of Section 3A in the Act, corresponding amendments were carried out in the Central Excise Rules, 1944 (for short, the Rules') by adding Rule 96ZP which provides the procedure required to be followed by the manufacturers of hot re-rolled products for payment of excise duty under the compounded levy scheme. As under the scheme, the duty was payable on the capacity of production. Hot Re- Rolling Steel Mills Annual Capacity Determination Rules, 1997 (for short, the Capacity Determination Rules') were also framed.