2020 (3) TMI 835 - AT - Central Excise

Valuation - annual capacity of production - Section 3A of Central Excise Act, 1944 - demand was confirmed on the ground that appellant had not intimated the department before stopping production / closing of the factory - HELD THAT - Taking note of the fact that there is stoppage of production during the period 1.4.1998 to 17.6.1998, the demand of duty, interest or penalty for the disputed period cannot sustain and the same is required to be set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Failure to pay duty liability for a specific period
- Applicability of abatement in case of stoppage of production
- Interpretation of rules regarding duty payment

Detailed Analysis:

Issue 1: Failure to pay duty liability
The case involved the appellant, who failed to pay duty liability for the period from 1.4.1998 to 31.3.2000. The original authority confirmed the demand, and after appeal, the matter was remanded for fresh consideration. The adjudicating authority set aside the demand for a specific period but confirmed it for another period, along with interest and penalty. The appellant challenged this decision before the Tribunal.

Issue 2: Applicability of abatement in case of stoppage of production
The appellant argued that they had informed the department about the stoppage of production from 11.01.1998 on 18.06.1998. They requested abatement from 1.4.1998 to March 2000. The appellant cited a case from the Hon'ble Madras High Court where the benefit of abatement was granted even though the intimation was given after the stoppage of production. The Commissioner verified the stoppage of production before 18.6.1998, and the High Court held that the demand for duty for the period from April 1998 to March 1999 was not sustainable in law.

Issue 3: Interpretation of rules regarding duty payment
The Commissioner noted that there was a stoppage of production in the factory before 18.6.1998, even though the intimation was given on that date. The Hon'ble jurisdictional High Court emphasized that factual statements made by the assessee and reports from officers should be considered. The Tribunal held that demand of duty, interest, or penalty for the period from 1.4.1998 to 17.6.1998 could not be sustained due to the stoppage of production, setting aside the impugned order and allowing the appeal with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for duty, interest, and penalty for the disputed period due to the verified stoppage of production. The decision highlighted the importance of timely intimation and factual evidence in determining duty liabilities under the relevant rules and regulations.