BHAWANI SHANKER CASTINGS LTD. Vs. CCE

JUDGEMENT

(1.) The appeal of the appellants is directed against the Order -in -Original passed by the Commissioner. The facts in brief are as under: The appellants, M/s. Bhawani Shankar Casting Ltd. Vill. Raowali, Jalandhar operating an induction furnace of 3 MT capacity and manufacturing non -alloy steel ingots, filed an application dated 23.9.97 giving their option to work under Rule 96ZO(3) of Central Excise Rules, 1944 (the Rules for short). The Commissioner Central Excise vide order dated 22.9.98, determined the annual capacity of production of the unit as 9600 MT in terms of Notification No. 24/97 -CE(NT) dated 25.7.97 read with Section 3A of the Act. Accordingly, the appellants were required to pay duty of Rs. 5 lakhs per month, through account current as per Rule 96ZO(3) of the Rules. In the meantime, the appellants vide their letter dated 15.1.98 made submissions to the Commissioner, that they have obtained an order worth Rs. One crore for supply of steel casting to Rail Coach Factory, Kapurthala, and that they would ordinarily be producing Steel Casting and may also produce M.S. Steel Ingots and be discharging their duty liability w.e.f. 16.1.98 under normal procedure prescribed under Section 3 of the Act and would be paying excise duty @ 15% adv. After availing modvat credit on inputs.The appellants had also challenged the duty liability determined by the department in the High Court vide CWP No. 15310/99, and the court in its judgment dated 29.9.99 directed the Commissioner, to dispose the application of the appellants afresh after affording an opportunity of personal hearing to them. Under Order -in -Original dated 22.2.2002 the Commissioner observed that, the Hon'ble Supreme Court in the case of M/s. Venus Casting (P) Ltd 2002 (117) ELT 273 (SC) & M/s. Supreme Steel & General Mills 2000 (133) ELT 513 (SC) had held that the two procedures namely one under Sub -section (4) of Section 3A of Central Excise Act and the other under Sub -Rule (3) of Rule 96ZO of Central Excise Rules are alternative procedures and the assessee has to opt for one and once having done so he cannot claim the benefit of the other. The Commissioner has further observed that as per Notification No. 30/97 -CE(NT) dated 1.8.97 if a manufacturing unit ordinarily produces Castings or Stainless Steel products but also incidentally produces non -alloy Steel ingots and Billets, the provisions of Section 3A shall not apply to that unit and duty may be chargeable from that unit under the provisions of Section 3 of Central Excise Act, 1944. It was found that, during the period 15.1.98 to 31.3.98, the party produced 674.850 MT ingots and 372.220 MT castings i.e. the notified goods were produced in predominance and the unit could not be considered to have worked under Section 3 of the Act. Thus, it has been held that party and worked under Section 3A under compounded levy scheme from 1.9.97 to 31.3.98.In view of the above facts, the Commissioner rejected the appellant's claim and ordered the appellants to pay duty in terms of order dated 22.9.98 for the period from 1.9.97 to 31.3.98 under the provision of Section 3A of the Act, and from the period from 1.4.98 to 31.3.2000 under Section 3 of the Central Excise Act, 1944 as per the rate specified for the period.

(2.) Heard both sides.

(3.) The appellants are seeking the quashing of the order, by placing reliance on the judgment of the Hon'ble Supreme Court in the case of CCE v. Cotspun Ltd. , claiming that the classification/modvat credit declaration filed by them has neither been controverted/objected nor any review show cause notice was issued by the department. The appellants filed classification and modvat declaration under Rules 173B and 57G respectively on 16.1.98. The Ld. Commissioner erred in demanding duty in respect of non -alloy steel ingots (sub -heading 7206.90) under Section 3A as per the capacity determined by the department vide letter No. V(72)/30/26/Chd -II/TU/97/1133 dated 22.9.98 ignoring the production of castings and duty payment thereon under Section 3 ibid during the period 16.1.98 to 31.3.98. It is incorrect to demand duty on the production capacity determined under Section 3A on notified goods i.e. non -alloy steel ingots ignoring the production of non -specified goods and payment of duty thereon under Section 3 on non -notified goods. The demand of duty beyond the production capacity of the furnace is bad in law. The claim for modvat entitlement was not considered. The direction of the Commissioner to pay duty under Section 3A for the period 16.1.98 to 31.8.98 without considering the show cause notice dated 23.4.98 is bad in law. The impugned order is passed on the basis of assumptions and presumptions, which are incorrect and bad in law. They placed reliance on the Supreme Court judgments in the case of Oudh Sugar Mills Ltd. v. UOI 1978 (2) ELT J172 (SC) and Gian Mahtani v. State of Maharashtra 1999 (110) ELT 400 (SC) in support of the above submissions.