REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2715 OF 2003

M/s Hans Steel Rolling Mill …..Appellant

vs.

Commnr. of Central Excise, ….Respondent Chandigarh

WITH

CIVIL APPEAL NO. 2717 OF 2003

WITH

CIVIL APPEAL NO. 3988 OF 2003

JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. The issue that falls for consideration in these appeals is, as  

to whether the provisions of time limit that are contained in  

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Section 11A of  the Central  Excise Act,  1944 (in short ‘the  

Act’) are applicable to the recovery of amounts due under the  

compound levy  scheme for  Hot-Re-rolling  mills,  under  the  

Annual  Capacity  determination  Rules  1997  because  

otherwise, it is a separate scheme for the collection of Central  

Excise Duty for the goods manufactured in the country.

2. In order to record a definite finding on the aforesaid issue it  

would be necessary to set out certain facts leading to filing of  

the present appeals.

3. The appellants are engaged in the manufacture of iron and  

steel products falling under Chapter 72 and 73 of the Central  

Excise  Tariff  Act,  1985.  During  the  period  ranging  from  

01.09.1997  to  31.3.2000,  the  goods  manufactured  by  the  

appellants were chargeable to Central Excise Duty in terms  

of  Section  3A  of  the  Act.  As  per  the  Act,  the  duty  was  

suppose to be paid on the annual production capacity of the  

plant,  irrespective  of  the  actual  production.  Under  the  

scheme of Section 3A, the payment of duty to be under Rule  

96ZP of  the Central  Excise  Rules.  The Hot-Re-rolling  Steel  

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Mills  Annual  Capacity  Determination  Rules,  1997  were  

introduced  by  notification  no.  32/97-CE  (NT)  dated  

01.08.1997,  wherein  the  manner  and  procedure  for  

determination of annual capacity of rolling mill was provided.  

On  27.04.1998,  the  Commissioner  of  Central  Excise  

determined the Annual Capacity to be 3355 MT.  

4. Being aggrieved by the determination made, the appellants  

filed an appeal before the Customs, Excise & Gold (Control)  

Appellate  Tribunal,  (in  short  ‘the  Tribunal’)  New  Delhi,  

whereby and whereunder the Tribunal remanded the matter  

back  to  the  Commissioner  for  the  re-determination  of  the  

value.

5. A  show  cause  notice  was  issued  to  the  appellants  on  

03.11.1998, contending that the demand of the duty has to  

be based on the capacity determination of 3355MT, for which  

the recovery of duty under Section 11A of the Act amounting  

to Rs 2,19,750.00 was to be made.

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6. On 11.12.1998,  the  appellants  changed  the  parameters  of  

their re-rolling mill  and applied for the re-determination of  

the annual capacity for fresh declaration in terms of Capacity  

Determination  Rules.  On  31.05.1999,  the  Commissioner  

passed  an  order  based  on  Rule  5  of  the  Capacity  

Determination Rules stating the capacity as 1890MT. During  

the  pendency  of  the  final  re-determination,  the  Central  

Excise Department issued a demand notice under Section 11  

of the Act, for recovery of duty. Aggrieved by the same, the  

appellants  filed  a  writ  petition  before  the  Punjab  and  

Haryana  High  Court,  whereby  and  whereunder  the  High  

Court set aside the demand notice and directed the revenue  

to re-determine the annual capacity.  

7. On  04.01.2001,  the  Commissioner  of  Central  Excise  re-

adjudicated the matter and determined the annual capacity  

of  the  period  1.09.97  to  31.3.2000  to  be  1890MT.  The  

appellant  filed  an  appeal  before  the  Tribunal  against  the  

same. On 08.04.2002, the larger bench of the Tribunal, held  

that in case of the manufacturer operating under Compound  

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Levy Scheme in terms of  Section 3A of  the  Act,  and Rule  

96ZP  of  the  Central  Excise  Rules,  recovery  mechanism  

provided  in  terms  of  Section  11A  of  the  Act  is  not  to  be  

followed and hence the matter was to be remanded back to  

the Commissioner for re-determination.

8. Still  aggrieved  the  appellants  filed  the  present  appeals  on  

which  we  heard  the  learned  counsel  appearing  for  the  

parties, who have taken us through various orders passed by  

the different  authorities  and also  through other  connected  

records. Having considered the same, we proceed to dispose  

of  the  present  appeal  by  recording  our  reasons  for  our  

conclusion.

9. It was submitted by the counsel appearing for the appellants  

that the provisions of Section 11A of the Act are mandatory  

for  recovery  of  any  duty  short  levied  and  short  paid.  The  

learned counsel for the petitioner further contended that the  

Section 11A of the Act stipulates the procedure to be followed  

invariably  and  without  exception  for  recovery  of  any  duty  

which  has  not  been  levied  or  not  paid  or  short  paid  or  

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erroneously refunded. The counsel referred to sub Section (2)  

of  Section  11A  of  the  Act  which  stipulated  that  the  

determination  of  amount  of  duty  short  levied  etc,  from  a  

person is to be made after considering his representation in  

the matter. In this case since the recovery proceedings have  

been initiated under Section 11 of the Act,  the procedural  

requirements for issuing notice, determining the amount etc,  

have not been satisfied at all. The counsel further submitted  

that there is no exception in the Central Excise Act or Rules  

regarding the procedure of recovery.

10. The aforesaid submissions of the counsel appearing for the  

appellants were however refuted by the counsel appearing for  

the respondent. The learned counsel for the respondent has  

pointed  out  that  under  the  Compound  Levy  Scheme,  the  

appellants  opted  for  the  payment  of  duty  at  compounded  

rates and filed declarations furnishing details about annual  

capacity of production and duty payable on such capacity of  

production.  Once  the  commissioner  approved  such  

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applications, payments are to be made in terms of Rule 96ZP  

of the Rules.

11.We  have  already  set  out  the  issue  which  falls  for  our  

consideration in these present appeals.

12.On going through the records it is clearly established that  

the appellants are availing the facilities under the Compound  

Levy  Scheme,  which  they  themselves,  opted  for  and  filed  

declarations  furnishing  details  about  annual  capacity  of  

production and duty payable on such capacity of production.  

It has to be taken into consideration that the compounded  

levy scheme for collection of duty based on annual capacity  

of production under Section 3 of the Act and Hot Re-rolling  

Steel Mills Annual Capacity Determination Rules, 1997 is a  

separate  scheme from the  normal  scheme for  collection  of  

central excise duty on goods manufactured in the country.  

Under the same, Rule 96P of the Rules stipulate the method  

of  payment  and  Rule  96P  contains  detailed  provision  

regarding time and manner of payment and it also contains  

provisions  relating  to  payment  of  interest  and  penalty  in  

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event of delay in payment or non-payment of dues. Thus, this  

is a comprehensive scheme in itself and general provisions in  

the Act and Rules are excluded.

13. The judgments of this court in the cases of Commissioner of  

C. EX & Customs v. Venus Castings (P) Ltd as reported in  

2000 (117) ELT 273 (SC) and, Union of India v. Supreme  

Steels  and General  Mills  as reported in 2001 (133) ELT  

513  (SC),  has  clearly  laid  down  the  principle  that  the,  

compound levy scheme is a separate scheme altogether and  

an assessee opting for the scheme is bound by the terms of  

that particular scheme. It is settled matter now that Section  

11A of the Act has no application for recovery under different  

schemes.  

14. In  the  case  of  Collector  of  Central  Excise,  Jaipur  V.  

Raghuvar (India) Ltd  as reported in 2000 (118) ELT 311  

(SC), this court has categorically stated that Section 11A of  

the  Act  is  not  an  omnibus  provision  which  stipulates  

limitation for every kind of action to be taken under the Act  

or Rules. An example can be drawn with the Modvat Scheme,  

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because even in that particular scheme, Section 11A of the  

Act  had  no  application  with  regard  to  time  limit  in  the  

administration of that scheme.  

15.We are in agreement with the finding and decision arrived at  

by the Tribunal that the importing of elements of one scheme  

of  tax  administration  to  a  different  scheme  of  tax  

administration  would  be  wholly  inappropriate  as  it  would  

disturb the smooth functioning of that unique scheme. The  

time  limit  prescribed  for  one  scheme  could  be  completely  

unwarranted for another scheme and time limit  prescribed  

under Section 11A of the Act is no exception.  

16.Accordingly, in view of the above, we find no merit in these  

appeals which are dismissed herewith but without costs.

                                               .....….……………………………, J     (DR. MUKUNDAKAM SHARMA)

......…..……………………….……,J     (ANIL R. DAVE)   

NEW DELHI;

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MARCH 10, 2011.

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