CX - Expressing unhappiness in marriage can never be taken to be tantamount to opting for divorce - after having opted for paying duty under Rules 96ZO(3) unless they opted out of compounded levy they could not have paid duty on actual production basis u/s 3A (4): CESTAT
By TIOL News Service
NEW DELHI, JAN 05, 2015: VIDE Final Order dated 7.10.2005, the CESTAT upheld the o-in-o dated 25.04.2003 passed by the CCE, Meerut in terms of which the duty demand on the appellants was confirmed assessing their liability under Rule 96 ZO(3) of the (then) Central Excise Rules, 1944.
The appellant filed an appeal before the Allahabad High Court and vide order dated 07.04.2014, the High Court 2014-TIOL-715-HC-All-CX ordered -
"10. We find that the Tribunal has not considered the plea of the appellant that for the financial year 1999-2000 under Rules 96 ZO(3) the option has (sic) required under Sub-Rule 3 of 1996 ZO has not been given by the appellant.
11. The Tribunal has not adjudicated that if the option has not be given for the 1999-2000 whether the appellant is liable for the payment of duty under Rule 96 ZO.
12. On the aforesaid facts and circumstances we are of the opinion that this aspect of the matter requires consideration by the Tribunal afresh.
13. It is made clear that the matter is relegated only for the determination of the liability for the financial year 1999-2000 and not for any other year."
Pursuant to the above, the matter was heard recently by the Tribunal.
The Bench observed that the issue for decision is whether the duty liability of the appellants for the year 1999-2000 is to be assessed in terms of Rule 96 ZO(3) after considering the plea of the appellants that for the financial year 1999-2000 under Rule 96 ZO(3), the option as required under Sub-Rule (3) of Rule 96 ZO had not been given by them.
The appellant submitted that the compounded levy scheme under Rule 96 ZO operated Financial Yearwise and, therefore, when no option was given by them to opt for the scheme for the FY 1999-2000, the assessment under Rule 96ZO was not legal and proper. They also contended that by their various letters they had been protesting that there is much difference between their capacity determination and actual production and that the duty paid by them under Rule 96 ZO should be treated to have been paid under protest.
The Bench observed -
++ As has been recorded by CESTAT in its order dated 7.10.2005 the appellants filed necessary declaration opting to pay duty under Rule 96 ZO(3) in the year 1997 and also again on 1.4.1998. The said Rule does not require filing of declaration on an annual basis. Indeed the format of the declaration prescribed under Rules 96 ZO(4) also makes it clear that the declaration is not for any particular financial year nor is it required to be filed for every financial year. The format of the declaration prescribed is re-produced below:
"We ________(name of the factory), located at ________(address) hereby wish to avail of the scheme described in sub-rule (3) of rule 96 ZO, for full and final discharge of our duty liability for the manufacture of ingots and billets of non-alloy steel under Section 3 A of the Central Excise Act, 1944 (1 of 1944)."
++ Even the appellants' declarations did not indicate that they were valid only for one financial year. Therefore unless the appellants specifically opted out of the scheme, the declarations they filed opting for the compounded levy scheme obviously continued to be valid.
++ The Supreme Court in the case of CCE Vs. Venus Castings Pvt. Ltd.- 2002-TIOL-113-SC-CX has held that the assessee if they have availed of the procedure under Rule 96 ZO(3) at their option, cannot claim the benefit of determination of production capacity under Section 3A(4) of the Central Excise Act, 1944 which is specifically excluded. As observed by CESTAT in its order dated 7.10.2005, the Supreme Court in the case of Venus Castings (supra) also held that a manufacturer cannot opt twice during one financial year first choosing to pay in accordance to Sub-Rule (3) of Rule 96 ZO of Central Excise Rules and, thereafter, to switch over to actual production basis under Section 3A (4) of the Central Excise Act.
++ This itself means that the assessee can opt out of the scheme at the end of the financial year. It is matter of record that the assessee never opted out of the compounded levy scheme after having opted in for the same. Letters cited by them only show that they were not happy with the quantum of duty liability in terms of the said Rule 96ZO(3). But such unhappiness can never be equated to a formal opting out of the scheme.
++ For example, expressing unhappiness in a marriage can never be taken to be tantamount to opting for divorce. Thus it is evident that in the wake of the fact that the appellants never opted out [after having opted in for paying under Rules 96 ZO (3)] they continued to be liable to be assessed thereunder. There is not even an iota of doubt that there was no requirement to file the option to opt for the scheme in every financial year. Similarly, there is no ground to even suggest that the declaration to opt for the scheme was valid only for one financial year. Thus once having opted in, one had to expressly opt out of the same.
The appellant also raised the issue of maintainability of the proceedings in the wake of abolition of Rule 96 ZO of CER, 1944 as well as Section 3A of the CEA, 1944. However, the Bench observed that since the adjudication is only within the narrow compass delineated by and in the wake of the judgement of Allahabad High Court, the said plea cannot betaken up for consideration.
In fine, it is held that the appellants were liable for payment of duty for the year 1999-2000 under Rule 96 ZO and, therefore, the Tribunal's Final Order dated 17.10.2005 required no modification whatsoever.
(See 2015-TIOL-34-CESTAT-DEL)
