2018 (1) TMI 363 - AT - Central Excise

Valuation - compounded levy scheme - adjustment of excess paid duty - Held that - the directions in the said final order dated 11.02.2015 were for adjustment of excess paid duty under compound levy scheme during the period from July, 1999 to November, 1999 for recovery of duty for the period from January, 1999 to June, 1999. When the said appeal filed in 2005 was pending disposal, on 24.05.2011, ₹ 20 lakhs refund was granted to the appellant which was the compounded levy duty paid during the period from July, 1999 to November, 1999. This Tribunal had directed that for the period from July, 1999 to November, 1999 duty should be paid on the basis of actual clearances made by the appellant - in view of the refund of ₹ 20 lakhs there is no amount pending with exchequer paid under compounded levy scheme during the period from July, 1999 to November, 1999. Therefore, there is no infirmity in the said direction to deposit ₹ 2,95,142/-. Revenue is directed to adjust the said amount of ₹ 3,50,000/- towards partial recovery of duties confirmed and directed through impugned Order-in-Original - appeal allowed in part.

Issues:
1. Dispute over duty payment under compounded levy scheme from January 1999 to June 1999.
2. Denial of Modvat credit and cum duty benefit.
3. Adjustment of excess duty paid in subsequent months.
4. Directions for recovery of duty liability and refund adjustment.

Issue 1: Dispute over duty payment under compounded levy scheme from January 1999 to June 1999:
The appellant, a manufacturer of processed cotton fabrics, opted for duty payment under a compounded levy scheme. The Commissioner initially fixed their monthly duty liability based on annual production capacity. However, a show cause notice was issued, challenging the scheme's applicability and demanding duty based on actual production. Various orders were passed, including remand by the Tribunal for re-quantification of duty and consideration of Modvat credit. The final order directed the adjustment of excess duty paid under the scheme for subsequent months against the duty liability for January 1999 to June 1999.

Issue 2: Denial of Modvat credit and cum duty benefit:
The Commissioner, in multiple adjudications, initially denied Modvat credit and cum duty benefit. However, subsequent orders and remands by the Tribunal directed the Commissioner to allow cum duty benefit. The final order confirmed the Modvat benefit and adjusted the duty payment for the disputed period, but did not adjust the excess payment in subsequent months.

Issue 3: Adjustment of excess duty paid in subsequent months:
The Tribunal's final order directed the adjustment of excess duty paid under the compounded levy scheme for subsequent months against the duty liability for the disputed period. The Original Authority confirmed the demand for the disputed period and directed the appellant to deposit the amount pertaining to the subsequent months, considering a refund received by the appellant during the pendency of the appeal.

Issue 4: Directions for recovery of duty liability and refund adjustment:
The final order directed the recovery of duty liability for the disputed period and adjustment of the excess duty paid in subsequent months. The appellant sought the adjustment of a specific amount paid during a later period, which the Tribunal directed to be adjusted towards the recovery of confirmed duties. The appeal was allowed partially based on these directions.

In conclusion, the judgment involved a complex dispute over duty payment under a compounded levy scheme, including issues related to Modvat credit, cum duty benefit, and the adjustment of excess duty paid in subsequent months. The Tribunal's final order provided directions for the recovery of duty liability and the adjustment of refunds, ultimately allowing the appeal partially based on these directions.

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