Minakshi Castings Recast

by

 

K. VIJAY KUMAR¹

            MA, BL,B.Ed,MBA

 

The Minakshi Castings case has become a trend setter and several cases of the department have been lost in the CEGAT on the ratio of Minakshi. Several articles have appeared in the ELT on this subject, including one by this writer. One writer had through these columns requested CEGAT to re-examine the case and I had suggested that the Act should be amended.

 

"A judge must not alter the material of which the Act is woven, but he can and should iron out the creases", observed Lord Denning in Seaford Court Estates Ltd v Asher. The Hon'ble High Court of Andhra Pradesh in a significant judgement has ironed out the creases that were seen by some in the Hot Rolling provisions of Central Excise Law.

For those who are not very familiar with the famous Minakshi, a quick recap.

For Hot Rolled products, Section 3A has been introduced into the Central Excise Act. under Rule 96ZP(1), a manufaturer is required to pay duty @ Rs. 400/ PMT on the annual capacity as determined by the Commissioner. Under rule 96ZP(3), he can pay duty @ Rs. 300/ PMT provided he does not avail the benefit of abatement or actual production under Section 3A(4). In the Minakshi case, the Hon'ble Tribunal held that there was a conflict between the Section and the rule and the Section shall prevail. In effect a person who has chosen 96ZP(3), can as per Minakshi go back to payment of duty on actual production as per Section 3A(4). It was in this context that I suggested in a previous article that the Act should be amended. But fortunately for the Government, the Hon'ble High Court of AP in SHATHAVAHANA STEELS & ALLOYS (P) LTD v. UOI 1999(114) ELT 787(AP) held in no uncertain terms that once the choice was exercised, there is no going back.

 

The Hon'ble High Court observed, When once the assessee avails of the option provided… he takes advantages and disadvantages associated with it. It is not open to the assessee to say that he would only avail of the beneficial part of the rule leaving the incidental disadvantages. ……. He can not have the best of both worlds. The petitioner opted for the scheme with his eyes wide open…. Can not be allowed to complain of the validity of that rule. When once the opts for lumpsum payment under Rule ZO(3) ……………………………..

The Court further stated, " The stand taken by the Commissioner that there is no provision for abatement or refixation of duty in a case governed by rule ZO(3) {identical to ZP(3)}, is in our view, unassialble.

 

The Hon'ble High Court's order has now made it clear that a manufacturer who has opted for ZP(3) will not have the right to go back to Section 3A(4), a clear reversal of the Minakshi order. In view of the High Court's order, the law in this regard is now settled at least for now.

EXCISE LAW TIMES – 15.04. 2000 – A 81