The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Rule 96ZO of Central Excise Rules is a self contained scheme and provisions of Section 11B of Central Excise Act is not applicable.
The bench of Justice Dilip Gupta (President), C. J. Mathew (Technical Member) and Somesh Arora (Judicial Member) has observed that the scheme framed under section 3A of the Central Excise Act and rule 96ZO of the Central Excise Rules is also a compounded levy scheme. It provides for a mechanism where duty liability can be adjusted. Though the issue involved in the matter before the Supreme Court was applicability of section 11A of the Central Excise Act to compounded levy scheme, the issue in the present appeal is whether section 11B of the Central Excise Act would be applicable.
A Division Bench of the Tribunal, while hearing this appeal, noticed that conflicting views had been expressed by Division Benches of the Tribunal in K.B. Rolling Mills vs. Commissioner of Central Excise, Hyderabad-I and Kothi Steel Ltd. vs. Commissioner of Central Excise, Vadodara on the issue as to whether section 11B of the Central Excise Act, 1944 relating to claim for refund of duty would be applicable in a matter where adjustment is claimed by an assessee of excess amount of duty paid against future duty liability in terms of rule 96ZO of the Central Excise Rules 2002.
In K.B. Rolling Mills, a Division Bench of the Tribunal held that section 11B of the Central Excise Act would be applicable, while in Kothi Steel another Division Bench of the Tribunal held that it would not be applicable. The Division Bench hearing this appeal also noticed that the Division Bench of the Tribunal in Kothi Steel failed to consider the decision of a Larger Bench of the Tribunal in Mohinder Steels Ltd. vs. Commissioner of C. Ex., Chandigarh.
Section 3 of the Central Excise Act, as it stood prior to 05.05.2017, provides that there shall be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods which are produced or manufactured in India as, and at the rates, set forth in the Schedule I to the Central Excise Tariff Act, 1975.
Section 3A of the Central Excise Act, which was inserted w.e.f. 14.05.1997, deals with the power of the Central Government to charge central excise duty on the basis of capacity of production. It provides that notwithstanding anything contained in section 3, in respect of goods notified by Central Government under section 3A, the central excise duty shall be levied and collected by deeming the annual capacity of production of the factory to be the annual production of such goods by the factory and the duty of excise on such notified goods would be at such rate as notified by the Central Government.
In exercise the powers conferred under section 3A of the Central Excise Act, the Central Government issued a notification dated 01.08.1997 notifying steel ingots of sub-heading 7206.90 as goods on which duty of excise shall be levied and collected in accordance with the provisions of section 3A.
At the same time, the Central Government by another notification dated 01.08.1997, inserted rule 96ZO in the Central Excise Rules. This rule provides for payment of central excise duty on steel ingots of sub-heading 7206.90, for the period from 1st August 1997, at the rate of Rs. 750 per metric tonne on capacity of production of the factory.
The appellant claims that in terms of the notification dated 01.08.1997 and rule 96ZO of the Central Excise Rules, the appellant had paid central excise duty in respect of the production of steel ingots in August 1997 at the rate of Rs. 750 per metric tonne. The appellant, therefore, paid excess duty for the production of August 1997 to the extent of Rs. 1,06,850/- as the appellant had paid duty at the rate of Rs. 750 per metric tonne for August 1997 instead of Rs. 600/- per metric tonne.
The appellant, therefore, claims that it became entitled to claim adjustment of the said amount. Accordingly, the appellant adjusted the said amount towards the duty liability for the month of March 2000 and informed the department.
A show cause notice was issued to the appellant proposing to disallow the said adjustment and consequently demanded duty short paid for the month of March 2000.
The appellant filed a reply to the show cause notice and contended that it had correctly made the adjustment.
The tribunal held that the Commissioner also erred in presuming that the adjustment allowed under paragraph I(b) and II(b) of rule 96ZO(1), is only on account of the amount paid by the manufacturer on or after 1st September 1997.
Case Details
Case Title: M/s. Jaidev Alloys Ltd. Versus Commissioner, Customs and Central Excise, Rajkot
Case No.: Excise Appeal No. 29 Of 2002
Date: 03.02.2025
Counsel For Petitioner: J.C. Patel and Shri Rahul Gajera
Counsel For Respondent:M.G. Rayka
