2009 (11) TMI 790 - AT - Central Excise

Summary

Issues:
- Dispute regarding duty payment for the period from 1-9-97 to 11-10-97 under Compounded Levy Scheme
- Eligibility for abatement under proviso to Section 3A(3) of the Central Excise Act

Analysis:
1. Duty Payment Dispute: The case involved an appeal against the order of the Commissioner (Appeals) regarding duty payment for the period from 1-9-97 to 11-10-97 under the Compounded Levy Scheme. The Appellant, a manufacturer of M.S twisted bars and angles, informed the jurisdictional Assistant Commissioner about their inability to commence production during this period due to machinery modification. The Commissioner fixed the annual production capacity at 3021 MT based on a declaration by the Appellant. The dispute centered on whether duty was payable for the period when no production occurred. The Appellant argued that since they did not produce any goods and had informed the Department, they were not liable to pay duty. The original Authority and Commissioner (Appeals) upheld the duty demand, which the Appellant contested.

2. Abatement Eligibility: The Appellant, through their Advocate, contended that no liability should arise as they were not engaged in production during the disputed period. Alternatively, they argued for the extension of abatement under the proviso to Section 3A(3) of the Central Excise Act. The Advocate cited precedents to support their case, including decisions by the Tribunal in similar matters. On the other hand, the Departmental Representative (DR) supported the Commissioner (Appeals)'s findings, stating that there was no provision for abatement before the production capacity was fixed. The DR emphasized that the Appellant did not fulfill the conditions for abatement and, therefore, should not receive the benefit.

3. Judgment: After considering the arguments from both sides and examining the records, the Judge found that the Appellant had duly informed about the factory closure for modification and had not commenced production during the disputed period. The Judge noted that the duty liability should not be imposed for a period when the Appellant was not engaged in production after intimating the Department. Even if the Appellant fell under the Compounded Levy Scheme from 1-9-97, the Judge held that the benefit of abatement should be extended as the unit did not manufacture goods during the period in question. Consequently, the Judge allowed the appeal, providing consequential relief as per the law.

In conclusion, the judgment resolved the duty payment dispute by ruling in favor of the Appellant, emphasizing that duty liability should not be imposed when no production occurred despite falling under the Compounded Levy Scheme. The decision highlighted the importance of considering the factual circumstances and providing relief in cases where no manufacturing activity took place, even if the legal framework applied from a certain date.