2009 (10) TMI 774 - AT - Central Excise

Summary

Issues:
- Abatement from payment of central excise duty denied
- Claim for abatement under Compounded Levy Scheme
- Allegation of time-barred demand
- Applicability of Section 11A of the Act
- Compliance with Rule 96ZO(2) of the Central Excise Rules
- Consumption of electricity during closure period
- Burden of proof on the Appellants
- Grant of abatement not a formality

Analysis:

The Appellants filed an Appeal against the denial of abatement from payment of central excise duty under the Compounded Levy Scheme. They claimed that their unit was closed for a significant period, fulfilling the conditions of Rule 96ZO(2) of the Central Excise Rules. The Appellants argued that they provided necessary declarations regarding the closure and re-start of their factory, thus meeting the requirements imposed by the Rule. Additionally, they contended that the demand was time-barred as they had complied with the necessary procedures and no suppression could be alleged against them.

The Revenue, represented by the Departmental Representative, countered that the demand was not under Section 11A of the Act but under Rule 96ZO(3) of the Central Excise Rules. They claimed that despite the Appellants' notifications of unit closure, physical verifications revealed the factory was operational during the stated closure periods. The Revenue highlighted instances where the Appellants reported unit closure but subsequent verifications showed the factory in operation, questioning the credibility of the Appellants' claims.

The Tribunal found that the Appellants' unit closure was subject to the provisions of Rule 96ZP(2) of the Central Excise Rules, which required specific notifications and declarations regarding electricity meter readings and stock positions. Despite the Appellants' notifications of unit closure, subsequent verifications by Revenue Officers revealed the factory was operational during the stated closure periods. The consumption of electricity during the alleged closure period raised doubts, as it was comparable to or higher than periods when the factory was running. The Tribunal emphasized that the grant of abatement was not a mere formality but required a thorough consideration of relevant facts.

In conclusion, the Tribunal dismissed the Appeal, finding no infirmity in the impugned order. The decision was based on the evidence indicating that the unit was operational during the claimed closure period, as demonstrated by electricity consumption data and verification reports. The Tribunal upheld that the burden of proof was on the Appellants to establish unit closure, which they failed to do convincingly, leading to the denial of abatement from central excise duty payment.