2009 (3) TMI 839 - AT - Central Excise

Summary

Issues:
1. Liability to pay duty under Rule 96ZP(3) of the Central Excise Rules, 1944 prior to 17-11-97 when the factory was closed.
2. Interpretation of Rule 96ZP(3) and (4) regarding the timing of informing the Commissioner for availing the facility of payment of duty.

Analysis:
1. The case involved the appellants, engaged in manufacturing Hot Re-rolled products, who opted for the Compounded Levy Scheme under Section 3A of the Central Excise Act. The dispute arose when the Commissioner demanded duty from 1-9-1997 without abatement or relief. The appellants contended that since their factory was closed from 1-8-97 to 18-11-97, the duty demand prior to 17-11-97 was not sustainable. They argued that as there was no production before 17-11-97, no duty should be levied. The Revenue, however, argued that the appellants, having a total furnace capacity of 3 M.T., were liable to pay duty from 1-9-1997 as per Rule 96ZP(3) of the Rules. The Tribunal analyzed the facts and submissions to determine the liability of the appellants.

2. The Tribunal examined the provisions of Rule 96ZP(3) and (4) to ascertain the timing of informing the Commissioner for availing the payment of duty facility. It was observed that the appellants' factory was closed from 1-8-97 to 18-11-97, during which they applied for the determination of Annual Production Capacity and opted for duty payment under Rule 96ZP(3) on 17-11-97. The Tribunal noted that Sub-rule (4) requires informing the Commissioner for availing the duty payment option. Since the factory was closed before 17-11-97, the Tribunal held that there was no scope for filing the option and paying duty prior to that period. The Tribunal distinguished between a claim of abatement and the situation where the factory was closed, emphasizing that the option filed on 18-11-97 would be prospective. Referring to precedent, the Tribunal highlighted a case where the benefit of abatement during the closure of the factory was recognized, supporting the appellants' position.

In conclusion, the Tribunal modified the impugned order, ruling that the demand of duty prior to 17-11-97 was not sustainable due to the factory closure. The appellants were held liable to pay duty from 18-11-97, disposing of the appeal accordingly.