2008 (8) TMI 757 - AT - Central Excise

Summary

Issues:
1. Central Excise duty liability under Compounded Levy Scheme.
2. Delay in allowing abatement claim.
3. Reduction of penalty and waiver of interest by Commissioner (Appeals).
4. Connection between abatement and payment of duty.
5. Appeal against waiver of interest and reduction of penalty.

Analysis:
The case involved the respondents, engaged in manufacturing excisable goods, falling under specific chapters of the Central Excise Tariff Act, 1985, and discharging duty liability under the Compounded Levy Scheme. A show cause notice was issued for failure to deposit duty for certain months, resulting in a demand of Rs. 3,45,000 along with interest and a penalty of the same amount. The respondents appealed, and the Commissioner (Appeals) noted that the appellants had paid duty for certain chambers of a machine and claimed abatement for a period, leading to a delay in abatement approval. The Commissioner reduced the penalty to Rs. 10,000 and waived interest, which the Revenue appealed against.

The Revenue argued that duty payment and abatement were distinct, emphasizing that the respondents were at fault for not paying duty on time. However, the Tribunal found that the abatement claim was related to a duty already paid, as evidenced by a rebate application submitted earlier. The Tribunal highlighted that the delay in settling the abatement claim was not a case of cash refund but a credit adjustment in the PLA, indicating that the appellants were justified in reducing the abatement claim from their duty liability. Additionally, the Tribunal noted that if the abatement claim had been rejected, the Revenue could have recovered the amount with interest. Consequently, the Tribunal upheld the Commissioner's decision, rejecting the Revenue's appeal.

In conclusion, the Tribunal affirmed the Commissioner (Appeals)'s decision, emphasizing the connection between the abatement claim and the duty payment, ultimately rejecting the Revenue's appeal against the reduction of penalty and waiver of interest.