2011 (5) TMI 786 - AT - Central Excise

Demand of duty along with imposition of penalty was confirmed by the original adjudicating authority on the ground that proper intimation in the prescribed format was not given and the permission of proper authority was not taken appellants submitted that, Subsequently, at the directions of the Revenue, another application was filed on 28-05-1999. Learned advocate submits that the second application was in the requisite Annexure-2 and the same Annexure-2 was filed at the time of submission of their earlier letter on 19-1-1999. There is no difference in the format. As such, the Revenue s grant of permission for closer of one chamber with effect from 24-6-1999 is not proper - Held that - merely because the Revenue has taken time in granting permission especially when the appellant have applied for one and a half month before the period in question, the same cannot be taken as a ground for upholding the appellant s duty liability and the appellant cannot be allowed to suffer on account of the lapse on part of the Revenue, appeal is thus allowed

Summary

Issues:
Confirmation of duty and penalty against the appellant for the months of March 1999 to June 1999 under the compounded levy scheme without proper intimation and permission for decrease in production capacity.

Analysis:
1. The appellant, working under the compounded levy scheme, informed the Revenue about the decrease in production capacity due to the reduction of one chamber via a letter dated 19-1-1999. Subsequently, an application was filed, but the Revenue granted permission only on 24-06-1999.

2. Proceedings were initiated against the appellant for duty confirmation from March to June 1999. The original adjudicating authority confirmed the duty demand and penalty for not providing proper intimation and obtaining permission. The Commissioner (Appeals) upheld this decision on appeal.

3. The appellant's advocate argued that the second application filed on 28-05-1999 was in the requisite format, similar to the first application, and should have been considered as related to the initial intimation on 19-1-1999. The delay in granting permission should not penalize the appellant.

4. The Revenue's representative contended that the appellant did not follow the prescribed procedure for obtaining permission before changing the production parameters. As per the rules, permission from the Commissioner of Central Excise was mandatory, which the appellant failed to secure.

5. The Tribunal observed that the appellant had indeed intimated the Revenue about the production change in the initial application on 19-1-1999. Even if the first application was not in the correct format, subsequent filings were in Annexure-2. The delay in granting permission should not hold the appellant liable, especially when the application was submitted well in advance.

6. Consequently, the Tribunal set aside the duty confirmation and penalty imposed on the appellant, granting them relief. The issue of confirming duty without considering certain aspects was deemed unnecessary as the main issue was resolved in favor of the appellant.

This judgment highlights the importance of timely intimation and proper procedure adherence in cases involving changes in production parameters under the compounded levy scheme. The Tribunal emphasized that delays in granting permission should not unfairly burden the taxpayer, especially when the necessary steps were taken well in advance.