2018 (9) TMI 1480 - AT - Central Excise

Refund claim - refund was claimed for the non-operative period of the machine during the month that was found 3rd May, 2016 to 31st May, 2016 - refund rejected on the ground that N/N. 17/2007-CE does not have any provision with regard to reduction in the amount of the duty to be deposited even if a particular machine become inoperative during the period of any month - Compounded Levy Scheme. Held that - The matter is no longer res-integra as it has already been decided in the case of Jupiter Industries vs. CCE, Jaipur 2006 (4) TMI 164 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR , where it was held that The direction of the Tribunal to refund excess amount received in respect of machine which had ceased to function during the month of July to August also does not call for any interference. Since in this case one machine being inoperative for the month of after payment of central excise duty; has not produced any goods and therefore same cannot be charged to compounded levy of central excise duty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim under compounded levy scheme for non-operative machine.

Analysis:
The appellant, engaged in manufacturing S.S. Patta Patti, deposited compounded central excise duty for 9 machines under a special procedure for compound levy scheme. When one machine became inoperative, a refund claim of ?37,419 was filed for the non-operative period. The claim was rejected by the Divisional Assistant Commissioner citing lack of provision for reduction in duty if a machine is non-functional. The Commissioner (Appeals) also rejected the claim, stating that the appellant must pay full duty for the month as they did not opt for the scheme for the first time. The appellant argued that duty is leviable only on manufacturing excisable goods and cited legal provisions and judgments supporting refund claims for non-functional machines.

The Tribunal noted that excess duty of ?37,419 was paid due to one machine being inoperative after advance payment for all machines. Refund claims for non-operational periods have been allowed in previous judgments like Jupiter Industries vs. CCE, Jaipur. The Tribunal referred to the Hon'ble Rajasthan High Court's order, emphasizing that no duty can be levied if no production occurs, and refund is warranted in such cases. As the inoperative machine did not produce any goods after duty payment, it cannot be subject to compounded levy of central excise duty. The order-in-appeal was deemed without merit, and the appellant's appeal was allowed with consequential relief as per law.

In conclusion, the Tribunal allowed the appeal, emphasizing the legal principle that duty is leviable on manufactured goods and refund claims for non-functional machines are valid under the compounded levy scheme. The decision was based on legal provisions, precedents, and the absence of production from the inoperative machine, leading to excess duty payment warranting a refund.