2006 (3) TMI 451 - AT - Central Excise

Issues:
1. Change in method of charging compounded levy for rolling machines.
2. Applicability of amended Notification No. 67/97, dated 27-11-1997.
3. Retrospective effect of notification on duty rates.
4. Time bar on demands and penalty imposition.
5. Mis-declaration and suppression of facts.

Analysis:

1. Change in method of charging compounded levy for rolling machines:
The appellant, a manufacturer of aluminium circles, opted for the compounded levy scheme under Rule 96ZB of C.E. Rules. Initially, they paid duty based on the diameter of their cold rolling machines as per Notification No. 33/97. However, they later discovered Notification No. 67/97, which changed the method to charge duty based on the length of the rolling machines. The appellant voluntarily paid the differential duty after this discovery.

2. Applicability of amended Notification No. 67/97, dated 27-11-1997:
The Tribunal examined the amended Notification No. 67/97, dated 27-11-1997, which altered the duty rates based on the length of the rolling machines. The Tribunal determined that this amendment did not have retrospective effect and was not clarificatory. It was established through various judgments that such changes in duty rates are prospective in nature.

3. Retrospective effect of notification on duty rates:
The Tribunal emphasized that changing duty rates through an amended notification does not imply retrospective application. The principle that alterations in duty rates are prospective has been consistently upheld in numerous judgments. Therefore, the Tribunal concluded that the increased duty rates under Notification No. 67/97 would only apply prospectively.

4. Time bar on demands and penalty imposition:
The appellant argued that the show cause notice issued by the Additional Commissioner demanding the differential duty was time-barred. The Tribunal agreed, stating that since the appellant had voluntarily paid the differential duty and regularly filed RT-12 returns, there was no suppression of facts or mis-declaration. Consequently, the demands were considered time-barred, and the penalty was set aside.

5. Mis-declaration and suppression of facts:
The Tribunal found that the appellant had acted in good faith by paying the differential duty promptly upon becoming aware of the amended notification. The department was informed about the activities of the appellant, including their compliance with the compounded levy scheme and filing of RT-12 returns. As a result, the charge of mis-declaration under Section 11A was deemed unsustainable, and the demands were set aside.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demands and penalty, as the change in the method of charging compounded levy, the applicability of the amended notification, and the retrospective effect of duty rates were thoroughly analyzed and found to support the appellant's position.

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