2006 (6) TMI 446 - AT - Central Excise

Summary

Issues:
1. Appeal against order-in-appeal passed by the Commissioner (Appeals).
2. Demand of duty under the Compounded Levy Scheme during the period of closure.
3. Imposition of penalty for delay in deposit of duty.
4. Surrender and re-registration under Central Excise affecting liability.
5. Dispute over penalty amount and relevant legal precedents.

Analysis:
1. The appeal was filed by the Revenue against the order-in-appeal passed by the Commissioner (Appeals). The case involved the manufacturing of MS girder, angles, etc., under the Compounded Levy Scheme. The production was stopped, the excise license was surrendered, and production resumed later. The Revenue demanded duty for the closure period, arguing that duty should have been paid under the Compounded Levy Scheme. The Commissioner (Appeals) set aside the demand but imposed a reduced penalty for a previous delay in duty payment.

2. The Revenue contended that duty should have been paid under the Compounded Levy Scheme during the closure period, and abatement should have been claimed. Regarding penalty, the Revenue argued for an amount equal to the duty paid after due dates.

3. The respondent argued that during the closure period, the factory was not operational, and registration was surrendered and re-granted later. They claimed entitlement to abatement if duty was payable for the closure period. The respondent also contested the penalty amount, citing a minimal delay in duty payment and discretion of the adjudicating authority to impose lesser penalties.

4. The judgment highlighted that since the unit was closed, and registration was surrendered, it could not be considered as operating under the Compounded Levy Scheme during the disputed period. The respondent's entitlement to abatement for the closure period was acknowledged, as the Revenue did not dispute the closure and surrender of registration.

5. The penalty issue was analyzed in light of legal precedents, including the decision in Pee Aar Steels (P) Ltd. v. CCE. The judgment emphasized that the penalty mentioned in the rule is not a maximum but the only penalty to be levied for failure to pay duty on time. The penalty reduction was set aside, restoring the original penalty amount. The appeal was disposed of accordingly, affirming the decisions on duty payment, abatement, and penalty imposition.