2003 (5) TMI 429 - AT - Central Excise

Summary

Issues:
Challenge to demand of duty and penalty imposition based on abatement claim for factory closure period under Central Excise Act and Rules.

Analysis:
The appeal involved a challenge by M/s. Amar Alloys (Pvt.) Limited against the demand of duty and penalty imposed by the Commissioner. The Appellants manufactured non-alloy steel ingots, attracting Central Excise duty under the compounded levy scheme. The Appellants claimed abatement of duty for the period their factory remained closed, as per Rule 96ZO, which the Commissioner did not allow, leading to the demand and penalty imposition. The Appellants argued that duty cannot be confirmed without allowing abatement and that they had duly filed closure intimation with meter readings. They contended that no duty was payable for the closed period, hence no interest or penalty should apply.

The Respondent, however, argued that duty liability must be discharged first under the law, and abatement can only be claimed after making an application to the Commissioner. The Respondent maintained that the Appellants cannot unilaterally take abatement and pay duty without Commissioner's order, justifying the demand and penalty imposition.

Upon considering both arguments, the Tribunal explained that Central Excise duty is paid before goods are removed from the factory, with Rule 96ZO allowing abatement for factory closure after due application to the Commissioner. The Tribunal noted that the Appellants paid duty after self-claiming abatement without the Commissioner's order, making them ineligible for abatement. Consequently, the Tribunal upheld the duty demand but set aside the penalty considering the circumstances. The Tribunal directed the Commissioner to decide on the abatement claim within one month of duty payment as confirmed in the impugned order.

In conclusion, the Tribunal upheld the duty demand but waived the penalty, emphasizing the need for proper abatement claim procedure under the Central Excise Act and Rules. The decision highlighted the importance of following legal requirements for claiming abatement and discharging duty liabilities appropriately.