2007 (3) TMI 583 - AT - Central Excise

Summary

Issues:
Departmental appeal against the order of the Commissioner (Appeals) regarding demand of duty under Rule 96ZP(3)(1) of Central Excise Rules, 1944 and imposition of penalty.

Analysis:
1. The department appealed against the Commissioner (Appeals) order demanding a sum under Rule 96ZP(3)(1) of Central Excise Rules, 1944 and imposing a penalty. The original authority had demanded Rs. 6,06,674/- and imposed an equal penalty. On appeal, the Commissioner (Appeals) upheld a duty demand of Rs. 31,150/- for 1997-98 only, granting relief for the rest of the period due to the unit's closure and non-engagement in manufacturing activities. The Commissioner relied on a precedent stating that duty cannot be demanded when there is no production, supporting the decision with a case reference. The department contended that the Executive Commissioner should have dealt with the determination and enforcement of duty under the Compounded Levy Scheme, seeking a remand of the matter. However, the Commissioner (Appeals) order was deemed well-founded with no valid grounds to set it aside, leading to the rejection of the department's appeal.

2. The Commissioner's decision was based on the fact that duty cannot be demanded when the unit is not engaged in manufacturing activities, citing a case precedent to support this position. The department argued that the Executive Commissioner should handle matters related to duty determination under the Compounded Levy Scheme. Despite the department's contentions, the Commissioner (Appeals) order was upheld as valid, with no substantial grounds presented to overturn it. Consequently, the department's appeal was dismissed, affirming the relief granted by the Commissioner (Appeals) due to the unit's closure and non-production activities during the disputed period.

3. The case revolved around the demand for duty under Rule 96ZP(3)(1) of the Central Excise Rules, 1944, and the subsequent penalty imposed by the original authority. The Commissioner (Appeals) decision to uphold a reduced duty demand for a specific year and grant relief for the remaining period due to the unit's closure was supported by legal principles stating that duty cannot be levied in the absence of production activities. The department's appeal challenging this decision on jurisdictional grounds was refuted, emphasizing the validity of the Commissioner (Appeals) order and the absence of substantial reasons to reverse it. Ultimately, the department's appeal was rejected, affirming the relief provided to the assessee based on the unit's non-operational status during the disputed period.