ORIENT STEEL INDUSTRIES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) This appeal has been directed against the impugned order -in -appeal vide which the Commissioner (Appeals) has affirmed the order -in -original of the Additional Commissioner who confirmed the duty demand in all of Rs. 8,31,673/ - (Rs. 3,05,956/ - under show cause notice dated 4 -5 -99 for the period October and November, 98 and Rs. 5,25,717/ - under show cause notice dated 9 -7 -99 for the period January to May, 99). The learned Counsel has disputed the validity of the impugned order before me mainly on two grounds; firstly that both the show cause notices demanding the duty under Rule 96ZP(3) of the Rules were not issued by a competent officer. Secondly, that no penalty and interest could be imposed on the appellant under Sub -rule (1)(A) of Rule 96ZP, when duty had been demanded under Sub -rule (3) of Rule 96ZP. The impugned order according to the Counsel on these two grounds is liable to be set aside. On the other hand, the learned JDR has reiterated the correctness of the impugned order. He has contended that the Superintendent who issued both the show cause notices was competent to issue the show cause notices and that the Board's instructions dated 27 -2 -97 contained in Circular No. 299/15/97 -CX were only administrative in nature under which only Assistant Commissioner was competent to issue the show cause notices. Therefore, the show cause notices which were made answerable to the Additional Commissioner/Deputy Commissioner, though issued by the Superintendent cannot be said to be illegal. Regarding the imposition of penalty under Sub -rule 1(A) of Rule 96ZP, the learned JDR has argued that under the said Rule also penalty could be imposed by the competent authority.

(2.) I have heard both the sides and gone through the record. The facts as made out from the record are that the appellants were paying duty @ Rs. 300/ -PMT under Sub -rule (3) of Rule 96ZP of the Central Excise Rules, when the compounded levy scheme under Section 3A of the Central Excise Act, was introduced. They allegedly availed wrongly the benefit of abatement under Sub -section (B) of Section 3A of the Central Excise Act which was not applicable to their case and thereby they short -paid the Central Excise duty to the tune of Rs. 3,05,956/ - during October and November, 98 and of Rs. 5,25,117/ - for the period January, 99 to May, 99. For recovery of these short -paid duty amounts, two show cause notices one dated 4 -5 -99 and another dated 9 -7 -99 respectively were issued. But both these two show cause notices were issued only by the Superintendent of Central Excise. The first show cause notice dated 4 -5 -99 was made answerable to Additional Commissioner, while the other dated 9 -7 -99 was answerable to the Joint Commissioner. But the bare perusal of the Board's Circular 299/15/97 -CX., dated 27 -2 -97 shows that the Superintendent of Central Excise was not competent to issue these show cause notices which was made answerable to the Additional Commissioner and Joint Commissioner respectively. Only the Assistant Commissioner could issue the notices. The Board's Circular is certainly binding on the Department and it could not be ignored by the officers/officials of the Department. The Superintendent was not at all competent to issue the show cause notices in question. He had in fact no power to act and issue show cause notices in question. That being so, the proceedings taken on the strength of these show cause notices, stand vitiated. In this context reference may be made to the ratio of law laid down in an identical situation, by the Tribunal, in Calcutta Steel Industries v. Commissioner of Central Excise, Chandigarh, 2000 (120) E.L.T. 691, Commissioner of Central Excise, Raipur v. Bhilai Engineering Corporation, 2000 (121) E.L.T. 536, Bharat Heavy Electricals Ltd. v. Commissioner of Central Excise, Indore, 2001 (138) E.L.T. 1017, S. Chakravorty v. CCE, Mumbai, 2001 (129) E.L.T. 797 and Hindustan Hosiery Industries v. CCE, Mumbai, 2001 (129) E.L.T. 797 (Tribunal) = 2001 (97) ECR 459, wherein show cause notices were issued by the officers/officials other than those authorised under the Board's Circular and the same were held to be invalid. Therefore, the impugned order is liable to be set aside on this ground alone.

(3.) Apart from this, when the demand of differential duty has been raised under Sub -rule (3) of Rule 96ZP of the Rules, penalty could only be imposed as provided therein, only under this Rule, while confirming the duty demand, whereas the adjudicating authority did not impose any penalty under this sub -rule, rather, imposed under Sub -rule 1(A) of Rule 96ZP, which was not invoked for raising duty demand. Therefore, penalty under Sub -rule 1(A) could not be legally imposed by the adjudicating authority, and as such the Commissioner (Appeals) has wrongly affirmed the penalty through the impugned order. The same is the position regarding imposition of interest. The ratio of law laid down in PR Steels v. CCE, 2004 (170) E.L.T. 406 (All.) = 2004 (93) ECC 633 referred by the learned DR is not attracted to the facts of the case. In that case all that has been observed by the Hon'ble Allahabad High Court is that the imposition of penalty under Rule 96ZP(3) is mandatory when the assessee had committed default in making payment of duty by tenth of every month. There is no dispute with this proposition of law. But in the instant case this is not the position. No penalty as observed above has been imposed under Sub -rule (3) of Rule 96ZP under which differential duty had been demanded from the appellants. Rather penalty has been imposed under another Sub -rule i.e. 1(A) of Rule 96ZP under which no duty had been demanded from the appellants.