2007 (9) TMI 174 - AT - Central Excise

Assessee opted Compounded Levy Scheme u/r 96ZP(3) Closure of factory for 5 months due to shortage of raw material Held that benefit of abatement from payment of duty for the period of closure is available to assessee u/s 3A(2) of CEA.

Summary

Issues:
1. Appeal against Order-in-Original CEX No. 15/2004 for non-payment of duty under the compounded levy scheme.
2. Tribunal's remand and subsequent dropping of proceedings against the respondents.
3. Interpretation of tribunal decisions Mega Alloys Ltd., Nalanda Electro Steel (P) Ltd., and J.M.G. Steel Pvt. Ltd.
4. Commissioner's reliance on tribunal decisions and non-consideration of written submissions.
5. Benefit under proviso to Section 3A(2) of the Central Excise Act, 1944.

Analysis:
1. The appeal was filed against the Order-in-Original CEX No. 15/2004 due to non-payment of duty under the compounded levy scheme by the respondents. The Tribunal remanded the matter, leading to the dropping of proceedings against the respondents by the Adjudicating Authority.

2. The Tribunal's remand was based on the non-consideration of written submissions by the party. The Commissioner passed the impugned order dropping the proceedings against the respondents, citing decisions like Mega Alloys Ltd., Nalanda Electro Steel (P) Ltd., and J.M.G. Steel Pvt. Ltd. Revenue contested the dropping of proceedings.

3. The Commissioner's decision was challenged by Revenue, arguing that the Commissioner should follow the Supreme Court's decisions rather than tribunal interpretations. The issue revolved around the applicability of Rule 96ZO(3) and Section 3A(4) of the Central Excise Act, 1944 within the same financial year.

4. The main contention was whether the respondents could avail the benefit under the proviso to Section 3A(2) despite opting for the compounded levy scheme under Rule 96ZP(3). The Tribunal considered the benefit of abatement from duty during the factory's closure, following decisions like Malviya Steel Ltd., Sanjay Alloys Pvt. Ltd., and Digamber Foundvy.

5. The Tribunal dismissed Revenue's appeal, holding that the appellant was not liable to pay duty during the factory's closure period. The decision was based on established case laws and the benefit under the proviso to Section 3A(2) of the Central Excise Act, 1944. The Commissioner's order was upheld due to the lack of proper reasons provided by Revenue.