2017 (8) TMI 1092 - AT - Central Excise

Compounded levy scheme - Section 3A of the Act read with Rule 96ZP(3)of Central Excise Rules 1944 - whether the option given earlier in the month of August by the appellant assessee remains valid and good for the amended and/or substituted compounded levy scheme with effect from 1st September 1997 - Held that - Admittedly Rule 96ZP(3) stood substituted with effect from 01/09/1997. Accordingly the option given under the original Rule 96ZP(3) if any becomes redundant and stale on substitution of Sub-rule (3) of Rule 96ZP. Admittedly there is no fresh option given as provided in Sub-rule (4) of Rule 96ZP in terms of the substituted Rule 96ZP(3) on or after 30/08/1997 - the appellant have never acted upon in terms of the said declaration which is found otherwise redundant and stale in terms of the amended provisions as from the very beginning soon after the implementation of the compounded levy scheme with effect from 01/09/1997 the appellant have opted to pay categorically on the basis of actual production under Section 3 of the Act which is evident from the averments before the Hon ble Delhi High Court in their writ petition and also evident from their letter dated 21/11/1997 filed before the ld. Commissioner. The appellant is entitled to pay duty under the normal scheme of Section 3 and under the provisions of Section 3A(4) on actual production basis. The appellant will be entitled to consequential benefits of adjustment of duty etc. if any paid in excess in accordance with law - the Adjudicating Authority were directed to determine the duty on the basis of actual production taking into account the returns filed by the appellant and allow adjustment of duty already deposited - appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of the compounded levy scheme under Section 3A of the Act.
2. Validity of the option given by the appellant under the original and amended/substituted schemes.
3. Compliance with the procedural requirements for opting for the compounded levy scheme.
4. Determination of duty liability based on actual production basis.
5. Applicability of the compounded levy scheme to the appellant's manufacturing activities.
6. Adherence to the provisions of Rule 96ZP of the Central Excise Rules, 1944.

Analysis:
1. The appeal pertains to the interpretation of the compounded levy scheme under Section 3A of the Act, specifically related to the duty liability of the manufacturers under the scheme. The appellant, aggrieved by the Order-in-Original, contests the requirement to pay duty under the compounded levy scheme as per the Commissioner's decision.

2. The crucial issue revolves around the validity of the option given by the appellant in August and its relevance to the amended/substituted compounded levy scheme effective from September 1, 1997. The Tribunal had previously remanded the case to the Commissioner to examine the appellant's case based on the Supreme Court's decision in a similar matter.

3. The procedural compliance aspect involves the requirement for the manufacturer to inform the Central Excise Commissioner about opting for the compounded levy scheme as per Rule 96ZP(4). The Tribunal found discrepancies in the appellant's submission of the declaration and observed that the appellant had not specifically opted for payment under the compounded levy scheme.

4. The judgment delves into the determination of duty liability based on actual production basis under Section 3A(4) of the Act. It highlights the appellant's actions indicating a preference for paying duty based on actual production rather than under the compounded levy scheme.

5. The Tribunal scrutinizes the applicability of the compounded levy scheme to the appellant's manufacturing activities, emphasizing the need for a valid and specific declaration opting for the scheme. The Tribunal concludes that the appellant is entitled to pay duty under the normal scheme based on actual production.

6. Lastly, the judgment discusses the adherence to the provisions of Rule 96ZP of the Central Excise Rules, 1944, emphasizing the importance of following the prescribed procedures for opting for the compounded levy scheme. The Tribunal directs the Adjudicating Authority to determine the duty based on actual production and allow adjustments accordingly.

This detailed analysis of the judgment provides insights into the legal intricacies surrounding the compounded levy scheme and the procedural requirements for opting for such schemes under the Central Excise Rules.