Steel Industries of Hindustan vs Commissioner of Central Excise

The present appeal has been filed u/s 35G of the Central Excise Act, 1944 (hereinafter referred to as the "Act") against the order dated July 1, 2004 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The appeal has been admitted on the following question of law:

(i) Whether the hon''ble Tribunal was justified in confirming the order of differential demand of duty and imposition of penalty when the abatement claims for the relevant period are lying as such for decision?

Briefly stated the facts giving rise to the present appeal are as follows:

The appellant is a manufacturer of hot re-rolled products which attracted Central excise duty u/s 3A of the Act. During the period from April, 1998 to March, 1999, the factory remained closed for different periods and some time for more than 15 days and, accordingly, it did not deposit the amount of duty under the belief that it was eligible for the abatement of duty on account of closure of factory under sub-section (3) of section 3A of the Act read with rule 96ZP of the Central Excise Rules, 1944. It had filed claims for abatement from time to time before the competent authority. However, it was issued a show-cause notice proposing demand of duty on the ground that during April, 1998 to March, 1999 it was required to pay duty amounting to Rs. 22.70 lakhs whereas it had paid only Rs. 9,24,611 and, accordingly, it was asked to pay differential duty. The Additional Commissioner vide the order dated May 7, 2002 had confirmed the demand of duty which has been upheld by the Commissioner (Appeals).

In the meantime, the matter relating to abatement claim was remanded by the Tribunal to the Commissioner''s adjudication. The appellant had already been allowed abatement of duty and this court in the appeal preferred by the Commissioner of Central Excise, Ghaziabad being Central Excise Appeal Defective No. 190 of 2006 vide the judgment and order dated July 26, 2010 (Commissioner of Central Excise v. Steel Industries of Hindustan [2013] 19 GSTR 634 (All)) while dismissing the appeal had held that there is no condition under rule 96ZP(2) of the Central Excise Rules, which provides that deposit of duty is a condition precedent for the claim of abatement.

The appellant had preferred an appeal before the Tribunal on the ground that they are not liable to pay differential amount of duty as demanded. By the impugned order, it was held that the appellant is liable to discharge the duty liability. Penalty is also imposable on the appellant as he had not discharged the duty liability cast upon him. Penalty was reduced to Rs. 2 lakhs.

Heard Shri A.P. Mathur, learned counsel for the appellant and Shri R.C. Shukla, learned counsel for the respondent. As this court had held in Central Excise Appeal Defective No. 190 of 2006 decided on July 26, 2010 there is no pre-condition for depositing of duty for claiming abatement under rule 96ZP, we are of the considered opinion that levy of penalty as also the demand of differential duty for the period during which the appellant has been allowed the claim of abatement is not justified. The order of the Tribunal is therefore set aside. The appeal succeeds and is allowed.