2013 (1) TMI 355 - AT - Central Excise

Compounded levy scheme - under Rule 96ZP - Annual capacity of production - Closure of unit - Non- intimation - of closing stock - Electricity meter reading - Held that - Rolling mill was being run on diesel generator set. Therefore non- furnishing of latest meter reading of electricity before the closure of the unit is not of much consequence - Rejection of abatement As regards non-furnishing of information regarding closing stock position, However, the fact remains that the officials of the department were negligent in the duty inasmuch as they did not visit the factory of the respondent for verification, despite having received intimation about the closure of production. The department has not filed report regarding those three visits for the benefit of the Tribunal. Thus, this is not clear whether or not the officials of the department verified the stock position on 17-11-1997, 22-11-1997 and 26-3-1998. Though the rule cast an obligation on the assessee to furnish information regarding stock position but this does not mean the excise official have no duty to verify the stock position. When the excise officers, however, visited the factory of the respondent on three occasions, it was expected of them to verify the stock position and presumably they must have verified the stock position, the aforesaid information has been withheld by the department. In favour of assessee

Summary

Issues:
1. Abatement of duty under Rule 96ZP of Central Excise Rules, 1944 for closure period.
2. Compliance with notification requirements for closure of unit.
3. Negligence of excise officials in verifying stock position during closure.

Analysis:
1. The case involved the respondent, a manufacturer of hot rolled products, operating under the compounded levy scheme. The dispute arose when the Commissioner determined the annual production capacity and allowed abatement for a closure period starting from 17-11-1997. The Board directed an appeal, contending non-declaration of closing stock and electricity meter reading in the intimation letter of closure on 5-11-1997. The department filed an appeal challenging the Commissioner's decision.

2. The respondent did not represent during the hearing, leading to an ex parte decision as per Rule 20 of CESTAT (Procedures) Rules, 1982. The department argued that the respondent failed to comply with Rule 96ZP(2) by not providing electricity meter reading and closing stock details during the closure notification. The Commissioner's order was scrutinized, highlighting the absence of stock information but also the negligence of excise officials in verifying the stock position during visits post-closure.

3. The Commissioner's order was analyzed, emphasizing the use of a diesel generator set for operations, making the meter reading less significant. The failure to disclose stock information was acknowledged, but the department's negligence in verifying stock during multiple visits was noted. The Tribunal found no fault in the Commissioner's decision to allow abatement, considering the lack of evidence on stock verification by excise officials. The appeal was dismissed based on the presumption of stock verification during the visits.

This detailed analysis covers the issues of abatement of duty, compliance with closure notification requirements, and the negligence of excise officials in verifying the stock position, leading to the Tribunal's decision to dismiss the appeal.