CCE Vs. ASHOKA STEEL INDUSTRIES

JUDGEMENT

(1.) Revenue has filed the present appeal against the order of the Commissioner of Central Excise (Appeals) vide which he has set aside the order of the original adjudicating authority confirming demand of duty of Rs. 1,29,468.00 along with imposition of personal penalty of an identical amount.

(2.) As per facts on record, the respondents were issued two show -cause notices raising demand of duty for the period April, 1999 to March, 2000 on the alleged ground that they have not discharged their duty liability in terms of the provisions of Rule 96ZP(3) of Central Excise Rules read with the provisions of Hot Re -rolling Steel Mills's Annual Capacity Determination Rules, 1997. The respondent's annual capacity of production was fixed as 863.129 MT by the Commissioner with monthly duty liability of Rs. 10,789/ - for the period 1997 -1988. Thereafter, the respondents never opted for payment of duty in terms of Rule 96ZP(3) and such for the subsequent financial period, no annual capacity of production was fixed by the Commissioner. The assessee's supply of electricity, was disconnected the electricity deptt. w.e.f. 25.9.1998. Intimation to that effect was sent to the Commissioner as also to their jurisdictional Central Excise Division Officers and Range Officers. As a result of the dis -connection of the electricity, the assessee's factory was completely closed and there was no production of the notified goods during the period 1999 -2000. As such, the respondents contested the demand on the ground that there was no fixation of annual capacity of production for the said period inasmuch as they never opted for the same and in any case there was no production of the excisable goods and as such duty liability cannot be fastened upon them.

(3.) The above plea of the respondents was accepted by the Commissioner (Appeals) vide his impugned order when he has observed as under: 7. I have carefully gone through the impugned order, appeal petition along with relevant papers and written as well as verbal submission of the appellants. The appellants had intimated about the closure of their mills to the Commissioner of Central Excise, Cal. II and concerned jurisdictional Divisional Officer and Range Officer vide their letter dated 25.9.1998. The closure since 25.9.1998 was due to disconnection of electric power supply by CESC Ltd. This connection had not restored during 1999 -2000. Hence it is clear that there was no production of notified goods in the appellants factory during 1999 -2000. During the material period i.e. 1999 -2000, the appellant did not exercise option under Rule 96ZP(4) to discharge duty liability under Rule 96ZP(3) and Commissioner of CE, Cal. II also did not pass any order in this regard fixing any duty liability on the appellant. Under such circumstances, no duty is chargeable under Rule 96ZP(3) for the period 1999 -2000 and, thus, demand of duty is not sustainable and provisions of Rule 96ZP(3) cannot be invoked to impose penalty and charging interest as well. The proviso to Sub -section (2) of Section 3 A of CEA 1944 states that where a factory producing notified goods is in operation only during a part of the year, the production thereof shall be calculated on proportionate basis on the annual capacity of production. In the decision of the following case laws, it was held that abatement is available in terms of Section 3A(2) of CEA 1944 for the period when the mill is closed : (a) In the judgment in the case of Malviya Steel Ltd. v. CCE, Jaipur reported in 2002 (49) RLT 418 (CEGAT -Del.) it was held that the benefit of abatement form payment of duty for the period of closure of the mills is available to the appellants under Section 3A(2) of CEA 1944. (b) In the case of "Good Earth Steel (P) Ltd. v. CCE" wherein it is held that factory remained closed due to disconnection of power supply for more than seven days - conditions specified in Rule 96ZP(2) of CER 1944 complied with - Abatement of duty for the period of closure of factory cannot be denied - Section 3A(3) of CEA 1944.