2017 (6) TMI 674 - AT - Central Excise

Quantum of abatement - eligibility for pro-rata duty - correct date for re-fixation of ACP - Held that - Compounded levy scheme for Ingots and billets was introduced in 1997 as a beneficiary scheme to simplify manner of discharging duty liability for the manufacturer of such goods and also to monitor central excise levy thereof. Just because the assessee had not intimated the fact of closure to the Commissioner but has only sent the letters to the officers subordinate to him is certainly no reason to reject the same - on both law and equity, it is not just and fair to continue to force the appellant to discharge duty liability in respect of a furnace which was totally non-functional and closed to levy excise duty on production that never came into existence - the denial of re-fixation of ACP w.e.f. 15.08.1998 is unreasonable and unsustainable, for which reason that part of the order is set aside. Pro-rata fixation of duty liability - Held that - the second furnace 1570 had been out of service and non-functional from 06.03.1998 to 15.07.1998, which has also been acknowledged by the Commissioner - the appellants will be eligible to discharge duty liability for that period, on pro-rata basis, as per the proviso to Rule 96 ZO (3) of the erstwhile Rules read with Rule 4 of the Induction Rules. With regard to interest and penal liabilities, it is seen that the matter is squarely covered by the judgment of the Hon ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills Vs. Commissioner of Central Excise 2015 (11) TMI 1172 - SUPREME COURT , where the provision for interest and mandatory penalty under these Rules had been held ultra vires by the Hon ble Apex Court - there cannot be any interest and penalty on the appellants. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Quantum of abatement, eligibility for pro-rata duty, correct date for re-fixation of ACP, interest and penalty liabilities.

Analysis:
The case involves the appellant engaged in manufacturing 'MS Ingots' under the Central Excise Tariff Act, 1985. The dispute pertains to duty discharge under the compounded levy scheme. The appellant had two furnaces, with one furnace breaking down due to a fire incident and later permanently closed. The issue revolves around abatement sought by the appellant, pro-rata duty liability, and the correct date for re-fixation of ACP.

In a previous round of litigation, the matter was remanded for re-fixation of ACP. The Commissioner recalculated the liability and quantum of abatement, demanding a differential duty amount along with penalties. The appellant appealed, leading to a series of legal proceedings, including a challenge in the High Court.

During the hearing, the appellant's advocate argued for pro-rata fixation of duty liability for the period when one furnace was non-functional. The respondent supported the adjudication. The Tribunal considered various letters and intimation by the appellant regarding furnace breakdown and closure, emphasizing the need for re-fixation of ACP and pro-rata duty liability.

The Tribunal found the denial of re-fixation of ACP unreasonable and unsustainable, setting aside that part of the order. It ordered the competent authority to re-fix ACP for the relevant period and communicate the same to the appellant. Additionally, the Tribunal ruled in favor of pro-rata fixation of duty liability for the period when the second furnace was non-functional.

Regarding interest and penalty liabilities, the Tribunal cited a Supreme Court judgment declaring certain provisions ultra vires and held that no interest or penalty should be imposed on the appellants. The appeal was allowed with consequential relief, as per law, emphasizing the appellant's eligibility for pro-rata duty liability and re-fixation of ACP.

In conclusion, the Tribunal's decision addressed the issues of abatement, pro-rata duty liability, re-fixation of ACP, and interest/penalty liabilities, providing a comprehensive analysis and ruling in favor of the appellant on key aspects of the case.