Whether demand confirmed before section 3A was repealed can be contested on the grounds of omission of said section?

PJ/Case Law/2013-14/1968

Case:- RAJSHREE ALLOYS INDIA LTD. Versus COMMISSIONER OF C. EX., JAIPUR

Citation:-2013 (295) E.L.T. 454 (Tri. - Del.)

Brief facts:- The appellant are manufacturers of MS Ingots. They were operating under the Compounded Levy Scheme under Section 3A of the Central Excise Act, 1944 read with Rule 96ZO(3) of the Central Excise Rules, 1944 and accordingly their monthly liability had been determined by the Commissioner (Appeals) based on their annual capacity of production. During the period from Jan. 98 to May, 1998, there was short payment to the tune of Rs. 49,663/- for which after issue of show cause notice, the duty demand was confirmed by the Asstt. Commissioner vide order-in-original dated 8-9-2000. The appeal against the Asstt. Commissioner’s order was decided by the Commissioner (Appeals) vide order-in-appeal dated 31-8-2012 by which the Commissioner (Appeals) upheld the Asstt. Commissioner’s order. Against this order of the Commissioner (Appeals), this appeal has been filed along with stay application.

Appellant’s contention:- Ms. Sukriti Das, ld. Counsel for the appellant, pleaded that the duty demand is not sustainable as Section 3A providing for levy and collection of duty based on capacity of production had been repealed w.e.f. 11-5-2001 without saving clause, that in view of this, the duty demand confirmed by the Asstt. Commissioner is not sustainable, that in this regard, she relied upon the judgment of the Hon’ble Gujarat High Court in the case of Krishna Processors v. Union of India - 2012 (280)E.L.T.186 (Gujarat)wherein Hon’ble High Court held that any proceedings concluded after omission of Section 3A would not survive in view of omission of Section 3A of the Central Excise Act w.e.f. 11-5-2001 without any Saving Clause, that in view of this, the appellant have strong prima facie case in their favour and hence, the requirement of pre-deposit of duty demand may be waived for hearing of the appeal and recovery thereof may be stayed till the disposal of the appeal.

Respondent’s contention:- Shri R.K. Verma ld. Departmental Representative opposed the stay application by reiterating the finding of the Commissioner (Appeals) in the impugned order and emphasized that in this case proceedings confirming the demand of duty short paid had been concluded in the year 2000 by the Asstt. Commissioner’s order dated 8-9-2000 and that in view of this, subsequent repeal of Section 3A w.e.f. 11-5-2001 does not have any effect and as such the Judgment of Hon’ble Gujarat High Court cited by the ld. Counsel is not applicable. He, therefore, pleaded that this is not a case for waiver.

Reasoning of judgement:- After considering the submissions from both the sides and perusing the records it was found that in this case there is no dispute that the proceedings for demand of duty short paid, which has been initiated by the issue of show cause notice on 18-11-1998 had been concluded by issue of order-in-original dated 8-7-2000 by the Assistant Commissioner confirming the duty demand. Thereafter since the appellant did not file any appeal, the Department initiated recovery proceedings, against which the appellant went to the High Court pleading that they have not received the order passed by the Assistant Commissioner and subsequently on directions of the Hon’ble Rajasthan High Court, the appeal filed by the appellant before the Commissioner (Appeals) was considered and the same was decided vide order-in-appeal dated 6-8-2012. He was of the prima facie view that this is a case where the proceedings for confirmation of duty demand had been concluded much before the repeal of Section 3A and as such the duty demand would not be effected by the repeal of Section 3A w.e.f. 11-5-2001. The judgment of Hon’ble Gujarat High Court in the case of Krishna Processors (supra) is not applicable to this case, as what has been held in that judgment is that all proceedings for recovery which were pending as on 11-5-2001 even if initiated prior to omission of the rule would thereafter lapse, while in this case, the adjudication proceedings for confirmation of duty had been completed much before the repeal. In view of this, the appellant have not been able to establish prima facie case. They are, therefore, directed to deposit entire duty amount within four weeks for hearing of their appeal. Compliance is to be reported on 3-4-2013.

Decision:- Pre-deposit ordered.

Comment:-The gist of this case is that if in a case where the proceedings for confirmation of duty demand had been concluded much before the repeal of Section, the duty demand would not be effected by the repeal of that section. However, the said demand may be contested if the proceedings were pending after repeal of the said section even if proceedings were initiated before the section was repealed.

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PJ/Case Law/2013-14/1968

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