2018 (8) TMI 546 - AT - Central Excise

Compounded levy Scheme - Closure of machinery - demand of Central Excise duty in respect of closed machines - N/N. 17/07-CE dated 01/03/2007 - Held that - In the instant case N/N. 17/07, gives an option of concessional rates of duty subject to certain conditions. The opening para of the said notification clearly prescribes that the assessee shall have an option to pay duty of excise on the cold rolling machines installed for cold rolling. It is apparent that the appellant have consciously opted for a scheme which does not envisage any concession in respect of machines which is installed in the factory but is not used. Para 6 and 8 of the Notification prescribed on the condition in respect to new factory/close factories resuming number of factories ceasing to work or reverting to normal procedure. There is no procedure in the notification or the scheme regarding non use of installed machines - Having chosen the option of availing the concession on the basis of number of machines installed, the appellants cannot now claim that the benefit of machines which they have declared to have not been used during certain period. Appeal dismissed - decided against appellant.

Summary

Issues:
Confirmation of demand, interest, and imposition of penalty under Compounded Levy Scheme for non-payment of Central Excise duty on closed machines.

Analysis:
The appellant, engaged in manufacturing stainless 'pattis' and 'pattas' through a cold rolling process, opted for the Compounded Levy Scheme under Rule 15 of Central Excise Rule, 2002. They were granted permission for seven cold rolling machines, but only a few were operational during a specific period. The appellant argued that they did not pay duty for closed machines, claiming compliance with Notification 17/07-CE. They contended that the term 'factory' was misinterpreted and cited the Acme Industries case and the Goel Tobacco Company case in support.

The respondent, however, supported the impugned order and referred to the Sethi Metal Industries case. The Tribunal analyzed the arguments and cited the Acme Industries case, highlighting that duty liability does not arise if a machine is dismantled. The Tribunal also considered the Jupiter Industries case, emphasizing that no duty can be demanded if no production occurs from machines under the Compounded Levy Scheme. The Tribunal differentiated between non-use and actual removal of machinery, emphasizing the requirement of production for duty levy.

The Tribunal noted that the Compounded Levy Scheme, as per Notification 17/07, mandates duty payment based on the number of installed machines, without provisions for non-use exemptions. The scheme does not address non-operation of installed machines. Consequently, the appellants cannot claim benefits for machines declared unused during a specific period after opting for the concession based on installed machines. Therefore, the appeals were dismissed, finding no merit in the appellant's arguments.

In conclusion, the Tribunal upheld the confirmation of demand, interest, and penalty under the Compounded Levy Scheme for non-payment of Central Excise duty on closed machines, based on the specific provisions of Notification 17/07 and relevant case law interpretations.