2001 (8) TMI 1417 - AT - Central Excise

Summary

Issues:
- Whether duty liability exists for a dismantled machine under Central Excise Rules.
- Whether refund claim for duty paid on a dismantled machine is permissible under the law.

Analysis:
1. Duty Liability for Dismantled Machine:
The appellants contended that once a cold rolling machine is dismantled and removed, there is no duty liability for that machine. They argued that the compounded rate of duty is payable as fixed under Rule 96ZA of the Central Excise Rules. The consultant emphasized that the duty is fixed on cold rolling machines utilized for cold rolling, implying no duty for a dismantled machine. However, the Departmental Representative (DR) argued that Rule 96ZB mandates the payment of duty based on the maximum number of machines installed by a manufacturer, even if a machine is dismantled. The DR asserted that the sum calculated under Rule 96ZB must be tendered, indicating no refund is permissible.

2. Permissibility of Refund Claim:
The Tribunal analyzed the Special Procedure for Compounded Levy of Central Excise Duty, where duty is paid per machine based on average production. The Rules do not specify payment for a machine not in existence or prohibit refund claims for excess payments. Section 11B of the Central Excise Act allows refund claims for excise duty. Despite the dismantling of a machine on 29-5-1998, duty was ordered to be paid for three more months, exceeding the sum payable under the Compounded Levy Scheme. The Tribunal held that the excess amount collected is refundable under Section 11B. The Lower Authorities erred in denying the refund, and the appeal was allowed with consequential relief for the appellants, directing the immediate refund of the excess amount collected.

In conclusion, the judgment clarifies that duty liability continues even for dismantled machines under specific Central Excise Rules. However, the law permits refund claims for excess duty paid on dismantled machines under Section 11B of the Central Excise Act, despite the absence of explicit provisions in the Special Procedure Rules. The Tribunal's decision emphasized the importance of adhering to legal provisions and ensuring the correct application of rules to prevent unjust enrichment and facilitate fair treatment of taxpayers.