2019 (5) TMI 1228 - AT - Central Excise

Refund of duty paid for non-operative period - manufacture of SS Patta/ Patti - Compound Levy Scheme - Department formed the opinion that there is no provision in the said Notification for refund of duty paid for the non operative period of the machines during the month - HELD THAT - There is no dispute about the fact that the appellant had regularly been opting for the compounded levy scheme as provided vide Notification No. 17/2007-CE dated 01 March, 2007. It is also an admitted fact that for the month of October 2016 and February 2016 for which the refund has been applied for by the appellant, all the cold rolling machines of the appellant were not functional, one or the other thereof being dismantled. The only dispute is that according to the Department since the machine was dismantled in the mid of the month pro-rata benefit is available only to the assessee who has opted for the compounding scheme for the first time which admittedly is not the case of appellant. Whereas, according to the appellant, the Notification makes no such distinction. Perusal of Condition 3 proviso 2 of the Notification makes it clear that this proviso talks about the discharge of duty liability of the assessee for the month in which he has moved his application opting for the said compounding fee, as required under Rule 2 of the said Notification, and in such a circumstance, this proviso says that the payment of duty shall be made as calculated on pro-rata basis. This observation makes it clear that the second proviso is not applicable in case where the benefit of compounding scheme is to be availed by the assessee in the form of a refund when any of its rolling machine has not been functional for any number of days in a given month. The duty of excise can only be levied in accordance of Section 3 of the Central Excise Act, 1944. In accordance whereof this duty is leviable only on manufacture of excisable goods and the Department can only collect the duty on the machines manufacturing excisable goods - When this second proviso is read alongwith the said Section 3, the argument of the learned Departmental Representative justifying the findings of the Commissioner (Appeals) becomes absolutely redundant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim under Compound Levy Scheme for SS Patta/Patti.
2. Rejection of refund claim based on non-operative period of machines.
3. Interpretation of Notification No. 17/2007-CE.
4. Application of Section 3 of the Central Excise Act.
5. Comparison with previous legal judgments.

Analysis:
1. The appellant, engaged in manufacturing SS Patta/Patti, filed a refund claim of &8377;1,16,910 for duty paid from October 2016 to February 2017 under the Compound Levy Scheme. The Department rejected the claim stating no provision for refund during non-operative machine periods. The original Adjudicating Authority and the Appeal Authority upheld the rejection, leading to the current challenge.

2. The appellant argued that despite acknowledging eligibility for duty benefit under the scheme, the rejection was based on a wrong premise of not opting for the scheme initially. Citing legal precedents, the appellant sought the appeal's allowance by setting aside the Commissioner's decision.

3. The Tribunal analyzed the Notification No. 17/2007-CE and noted that the provision regarding pro-rata calculation of duty applies when opting for the compounding scheme initially, not for refunds during non-functional machine periods. The Tribunal emphasized the duty liability only during the manufacturing process as per Section 3 of the Central Excise Act.

4. Referring to past cases like Jupiter Industries vs. CCE, Jaipur, and ACME Industries vs. CCE, Jaipur, the Tribunal highlighted the necessity of manufacturing goods for excise duty levy. The judgment also quoted the Rajasthan High Court's decision on excise duty levy only when production occurs, supporting the appellant's claim for refund during non-operational machine periods.

5. The Tribunal dismissed the Commissioner's distinction between cases, emphasizing the core issue of duty payment during non-manufacturing periods. Consequently, the Order rejecting the refund claim was set aside, and the Appeal was allowed in favor of the appellant.