2008 (4) TMI 660 - AT - Central Excise

Summary

Issues:
1. Duty liability under Rule 96ZP(3) for non-payment of duty.
2. Claim of abatement during factory closure periods.
3. Duty liability when factory permanently closed.

Analysis:
1. The appellant was manufacturing MS Plate under Chapter Heading 7216.90 and working under Rule 96ZP(3) of the Central Excise Tariff Act, 1985. The rule allowed payment of duty at a specified rate with conditions. Non-payment led to show cause notices for duty recovery. The Commissioner held that opting for lower duty rate under the rule barred the appellant from claiming abatement during closure periods.

2. The appellant acknowledged the legal position regarding abatement and did not contest the closure periods from 1-5-98 to 14-5-1998 and 26-9-1998 to 18-6-1998. However, they argued that from 9-7-1998 onwards, due to permanent factory closure caused by power disconnection and subsequent sale, no duty liability should exist. The Revenue contended that opting for Rule 96ZP(3) duty payment bound the appellant, regardless of factory status.

3. The Tribunal analyzed the rules and observed that Rule 96ZP(3) did not address permanent factory closure scenarios. They concluded that when a factory ceases operations permanently, no duty liability should apply. The Tribunal referenced a similar case where duty liability was negated upon unit closure. Despite the factual difference of registration surrender, the permanent closure fact remained crucial. Consequently, the Tribunal set aside the Commissioner's order and remanded the matter for reassessment based on the findings.

This judgment clarifies the duty liability under Rule 96ZP(3), the limitations on abatement claims during closure periods, and the absence of duty liability upon permanent factory closure. The decision emphasizes the impact of factory status on duty obligations and provides a legal precedent for similar cases.