2007 (10) TMI 484 - AT - Central Excise

Summary

Issues:
Whether the appellant is eligible for the benefit of the compounded levy scheme under Notification No. 32/2001-C.E. for the period from August 2001 to March 2002.

Analysis:
The dispute in this appeal revolves around the appellant's eligibility for the benefit of the compounded levy scheme as per Notification No. 32/2001-C.E. The appellant applied for central excise registration on 12-4-2001, but commercial production did not commence until 23-8-2001. The Commissioner rejected the appellant's claim under the notification, leading to a demand for duty and interest amounting to Rs. 1,76,55,582. The compounded levy scheme was introduced through various notifications, with specific requirements for existing units and new processors. The critical question is whether the appellant should be considered an existing unit as of 1-5-2001 or a new processor starting commercial production on 23-8-2001.

The Commissioner held that since the appellant obtained registration on 12-4-2001, they should be treated as an existing unit from 1-5-2001, thus denying them the benefit of the scheme. However, the appellant argued that their application for registration was to secure Modvat credit for capital goods, and they should be considered a new processor starting commercial production on 23-8-2001. The Tribunal agreed with the appellant, emphasizing that an independent textile processor must apply before the commencement of commercial production, as stated in the notification. The Tribunal found that the appellant's application on 16-8-2001, before the start of commercial production on 23-8-2001, aligned with the requirements of the notification. Therefore, the Tribunal concluded that the appellant was entitled to the benefit of the scheme under para 7(1) of the Notification.

In light of the above analysis, the Tribunal dismissed the Revenue's arguments, set aside the impugned order by the Commissioner, and allowed the appeal in favor of the appellant. The Tribunal emphasized that the application for central excise registration alone did not establish the appellant as an existing processing unit, and the timing of the application in relation to the start of commercial production was crucial for determining eligibility under the notification. The judgment was pronounced on 22-10-2007 by the Appellate Tribunal CESTAT, Ahmedabad, with detailed reasoning provided by Member (J) Archana Wadhwa.