2012 (2) TMI 441 - AT - Central Excise

Duty demand - Scheme for excise duty liability based on installed Annual Capacity - Appellant opted for duty payment - Held that - if a manufacturer claims abatement for not working during a short period as provided in Section 3A(3) conditions prescribed have to be followed. Such conditions involve giving advance intimation taking meter reading for electricity supply etc. to make sure that the manufacturer does not actually do manufacturing activity during such period. However there are no such conditions prescribed in sub-section (2). Apparently the appellant has tried to take benefit of this loop-hole by just sending intimation that they were surrendering the certificate. The Authorised Representative for Revenue submits that it is this dubious method that the Appellant has adopted to evade excise duty. As may be seen the adjudicating authority accepted that the factory was closed during Sep. 1997 and Oct. 1997 and also in March, 1998. The First Appellate authority has not accepted that the factory was closed during the period because intimations regarding last reading for electricity supply was not intimated and has confirmed duty liability for the entire period of Sep. 1997 to March, 1998. The Commissioner (Appeals) has accepted the contention of Revenue that the request for surrender of registration was an eye-wash and they were actually producing goods during the entire period. Appellants did not do manufacturing activity during the period 2-9-1997 to 28-11-1997 and also from 28-2-1998 to 31-3-1998. So I hold that the duty liability determined in the adjudication order to be proper - However penalty not imposable - Decided partly in favour of assessee.

Summary

Issues:
- Determination of duty liability based on installed Annual Capacity under Rule 96ZP(3) of Central Excise Rules, 1944.
- Non-payment of duty leading to Show Cause Notices, penalties, and interest.
- Appeals filed by both the Appellants and Revenue.
- Surrender of registration certificate and cessation of manufacturing activity.
- Dispute regarding duty liability and penalties imposed.
- Application of Section 3A(2) of the Central Excise Act.
- Interpretation of surrender of registration certificate and manufacturing activity.

Analysis:
1. The Appellants, manufacturers of MS Rounds and MS Squares, opted for paying excise duty based on installed Annual Capacity under Rule 96ZP(3) of Central Excise Rules, 1944. The duty liability was determined by the Commissioner for different periods.
2. The Appellants failed to pay the duty, leading to Show Cause Notices for short paid duty, proposing penalties and interest. The duty amounts were confirmed, and penalties were imposed after adjudication.
3. Appeals were filed by both the Appellants and Revenue, resulting in re-orders by the Commissioner (Appeals) confirming duty liability and imposing penalties for various months.
4. The dispute arose from the surrender of the registration certificate by the Appellants and the cessation of manufacturing activity, leading to conflicting views on duty liability and penalties.
5. The judgment highlighted the application of Section 3A(2) of the Central Excise Act, emphasizing the need for clarity in the procedural requirements for surrendering registration and determining duty liability.
6. The judgment concluded that the Appellants did not engage in manufacturing activity during certain periods, supporting the duty liability determined. The penalty imposed by the Commissioner (Appeals) was upheld for specific months, considering the non-payment of duty.

This comprehensive analysis of the legal judgment outlines the issues related to duty liability, non-payment, surrender of registration, and the interpretation of relevant legal provisions, providing a detailed understanding of the case and its resolution.