2010 (6) TMI 705 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 38/2007-C.E. dated 19-12-2007 and subsequent notifications.
2. Validity of the respondents' option under the compounded levy scheme.
3. Effect of rescission of Notification No. 38/2007-C.E. dated 19-12-2007 on the obligations of the manufacturers.
4. Conflict between Notification No. 38/2007-C.E. and subsequent notifications.

Analysis:
1. The case involved a dispute regarding the period from 1-7-2008 to 15-7-2008 when both Notification No. 38/2007-C.E. and Notification No. 30/2008-C.E. were in force. The adjudicating authority held that the respondents had no option under the law due to the changes brought about by Section 3A and subsequent notifications. However, the Commissioner (Appeals) noted that Notification No. 38/2007-C.E. was rescinded on 16-7-2008, and the department could not expect compliance with it after rescission. The issue was whether the rescinded notification still had an effect during the overlapping period.

2. The respondents had opted for the compounded levy scheme under Notification No. 38/2007-C.E. in January 2008. The respondents argued that they were bound by this option until the end of the financial year and could not opt out before that. They relied on the principle established in the case of CCE v. Venus Castings Pvt. Ltd., where it was held that once a scheme is opted for, the manufacturer cannot opt out until the expiry of the financial year. The respondents contended that their valid right acquired through the scheme could not be taken away until the rescission of Notification No. 38/2007-C.E. on 16-7-2008.

3. The statutory provisions required manufacturers of specified goods to make declarations and pay duty as per the new rules introduced under Section 3A and subsequent notifications. The dispute arose due to the overlap in the applicability of Notification No. 38/2007-C.E. and the new rules. The respondents argued that they were obligated to comply with the compounded levy scheme until the rescission of the old notification, while the department emphasized the overriding effect of the new statutory provisions and the need for compliance with the updated rules.

4. The conflicting notifications and the timing of rescission of Notification No. 38/2007-C.E. raised questions about the hierarchy of legal provisions and the obligations of manufacturers during the transitional period. The applicants sought a stay of the impugned order, arguing that the rescinded notification could not override the subsequent notifications until its rescission date. The Tribunal considered the prima facie case made by the applicants and granted a stay of the impugned order pending further appeals, acknowledging the need to clarify the legal obligations during the overlapping period.