2010 (5) TMI 720 - AT - Central Excise

Summary

Issues:
1. Determination of duty demand based on production days.
2. Applicability of Rule 96-ZO(1) of Central Excise Rules, 1944.
3. Interpretation of Compounding Levy Scheme.
4. Discharge of duty liability based on actual production or Annual Capacity determination.
5. Penalty and interest for non-payment of duty.

Analysis:

1. The case involved the determination of duty demand based on the number of production days. The Adjudicating Authority upheld the duty demand calculated using 39 production days, rejecting the appellant's claim of 33 production days. The duty demand was deemed correctly determined, leading to the imposition of penalties for non-discharge of duty by the specified deadline.

2. The appellant argued that they operated under Rule 96-Z(1) of the Central Excise Rules, 1944, not Rule 96-ZO(3). The counsel contended that duty payment was made based on actual production, and therefore, duty should be payable according to the alternative manner prescribed by Rule 96-ZO(1). However, the Revenue asserted that the Compounding Levy Scheme provided only two options for discharging duty liability, either based on total furnace capacity or actual production.

3. The Tribunal analyzed the Compounding Levy Scheme under Section 3A of the Central Excise Act, 1944. The scheme allowed for duty payment on notified goods as per Rule 96-ZO of the Central Excise Rules, 1944. The Tribunal noted concessions for non-production days and low capacity furnaces, emphasizing the importance of determining actual production for duty liability.

4. The Tribunal clarified that Rule 96-ZO is subordinate legislation and must align with the legislative mandate. The appellant's attempt to switch from one scheme to another without legal provision was deemed futile. Citing relevant case law, the Tribunal emphasized that once an option is chosen under the Compounding Scheme, the benefit of alternative procedures cannot be claimed.

5. Ultimately, the Tribunal upheld the orders dismissing the appellant's plea for re-determination of duty liability on 31st March of the financial year. The appellant was held liable for interest and penalty due to failure to discharge duty based on the chosen option under the Compounding Scheme. The settled position was maintained, leading to the dismissal of the appeal.

In conclusion, the Tribunal affirmed the duty demand calculation based on production days, upheld the applicability of the Compounding Levy Scheme, and emphasized adherence to the chosen duty payment option under the scheme to avoid penalties and interest for non-payment.