2008 (5) TMI 138 - AT - Central Excise

Appellants manufacture certain automobile components on job-work whether appellants are liable to pay duty as per Annual Capacity of Production (ACP) under Compounded levy scheme Revenue has not contested/appealed against the decision of Commissioner in similar case in which it was held that compounded levy scheme cannot be applied on such job-workers in view of finality of that decision, appellants are not liable to discharge duty as per ACP but duty is payable as per section 4

Summary

Issues:
- Appeal against impugned orders
- Determination of Annual Capacity of Production (ACP)
- Applicability of compounded levy scheme
- Comparison of products with another manufacturer
- Interpretation of relevant legal provisions

Analysis:

1. Appeal against Impugned Orders:
The appellants filed appeals against two Orders - one related to the re-determination of the Annual Capacity of Production (ACP) and the other concerning the demand for duty based on the ACP. The appellants contested these Orders and approached the Tribunal seeking relief.

2. Determination of Annual Capacity of Production (ACP):
The case involved a dispute over the determination of the ACP by the departmental authorities. The appellants manufactured automobile components using inputs supplied by another company. The ACP was re-determined based on changed parameters noticed during a visit by departmental officers. This led to the initiation of proceedings resulting in the impugned Order-in-Original.

3. Applicability of Compounded Levy Scheme:
The key issue revolved around whether the appellants should come under the compounded levy scheme. The Order-in-Appeal dealt with this issue, requiring the appellants to discharge duty liability based on the ACP. However, the Tribunal found that the appellants' products were not identical to those covered under the compounded levy scheme, as evidenced by a similar case involving another manufacturer. The Tribunal held that the appellants should not be required to discharge duty based on the ACP but rather on Section 4.

4. Comparison of Products with Another Manufacturer:
The learned advocate argued that the appellants' products were similar to those of another manufacturer who was not covered under the compounded levy scheme. The Tribunal agreed with this argument, citing detailed reasoning provided in the Order-in-Appeal related to the other manufacturer. Since this order had not been appealed against and had become final, the Tribunal concluded that the same reasoning applied to the present case.

5. Interpretation of Relevant Legal Provisions:
The Tribunal emphasized that the appellants' products did not meet the criteria for classification under the compounded levy scheme. The products were not sold by weight like hot-rolled products and were known in the market as components, not as hot-rolled items. The Tribunal rejected the reasoning behind the Order-in-Original and Order-in-Appeal, setting them aside and allowing the appeals with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellants, holding that they were not required to discharge duty liability based on the ACP and that the impugned orders were set aside. The decision was pronounced in open court on 16-5-2008 by the Tribunal members.