2011 (1) TMI 757 - AT - Central Excise

Production capacity based duty - Abatement - stoppage of production - As regards the stoppage of production from 20/6/98 to 30/6/98 - the plea of the appellant is that the production had been stopped on 20/6/98 due to disconnection of the electricity and this fact has been confirmed by the Assistant Engineer, Electricity Distribution - Since the necessary intimation regarding closure had been given on 21/6/98 alongwith the reading of the electricity meter and since as mentioned above, the requirement of Rule 96 ZO (2) is giving the intimation either prior to the date of closure or on the date of closure and since in this case, the intimation about closure was given only on 21/6/98, while the factory had closed since 20/6/98, the Commissioner has rightly denied the abatement for 20/6/98, which has not been disputed by the Appellant, but the Commissioner s order disallowing abatement for 21st June 1998 is not correct as the intimation regarding stoppage of production had been given to Assistant Commissioner on 21/6/98.

Summary

Issues:
Claim for abatement of Central Excise Duty for periods of non-production under Section 3A and Rule 96 ZO.

Analysis:
The appellant, a manufacturer of MS Ingots, operated under the compounded levy scheme of Section 3A of the Central Excise Act, 1944. Section 3A empowered the Central Government to notify goods for a special procedure for duty discharge based on production capacity. The duty on notified goods was to be levied at prescribed rates. Rule 96 ZO outlined conditions for abatement during non-production periods, requiring manufacturers to inform authorities about closures and restarts. The appellant ceased production on specific dates and provided required intimation to the Assistant Commissioner and Range Officer as per Rule 96 ZO. The Commissioner disallowed abatement for certain periods, leading to the appeal.

The Tribunal considered the submissions and the appeal memorandum. For the first non-production period, the appellant informed the Assistant Commissioner about closure on the same day with the electricity meter reading, meeting Rule 96 ZO requirements. Therefore, the Commissioner's denial of abatement for that period was deemed incorrect by the Tribunal. Regarding the second non-production period, the appellant claimed the electricity disconnection caused the stoppage, supported by the Assistant Engineer. The appellant notified the closure to the Assistant Commissioner the next day with the meter reading, satisfying Rule 96 ZO conditions. However, the intimation was not given prior to the date of closure as required. The Tribunal upheld the denial of abatement for the first day of closure but allowed it for the subsequent day as the intimation was provided promptly. Consequently, the impugned order was modified, granting abatement for the specified dates.

In conclusion, the Tribunal allowed the appeal, permitting abatement for the relevant non-production periods based on compliance with Rule 96 ZO requirements. The decision clarified the correct application of abatement provisions under Section 3A and Rule 96 ZO for Central Excise Duty on MS Ingots, ensuring adherence to prescribed procedures for informing authorities during production stoppages.