2008 (1) TMI 79 - AT - Central Excise

Working under compounded levy scheme having one hot air stenter duty fixed on basis of APC (annual production capacity) - M/s. Gujarat State Finance Co. sealed the unit of the respondent & taken over the possession of the unit and its assets machinery (stenter) were not available for production during disputed period Abatement cannot be denied merely for procedural mistake (Assessee not intimated to dept. about sealing)

Summary

Issues:
Department's appeal against Commissioner's order restricting duty demand period.

Analysis:
The Department appealed against the Commissioner's order restricting the duty demand period for a respondent working under a compounded levy scheme. The respondent's unit was sealed by M/s. Gujarat State Finance Corporation from 30-5-2000 to 17-10-2000, impacting production. The Department argued that abatement benefits were not applicable as the stenters were sealed by excise officers only on 17-10-2000 and 18-10-2000.

The Tribunal considered the prescribed procedure for claiming abatement under the compounded levy scheme, emphasizing that duty liability is based on machinery capacity, not actual production. The Tribunal noted that during the period of possession by GSFC, the stenters were unavailable for production. The Commissioner's decision to grant abatement was deemed legal, proper, and reasonable due to the undisputed fact that the machinery was not accessible for production. The Tribunal found no valid grounds to interfere with the Commissioner's findings, ultimately rejecting the Department's appeal.

In conclusion, the Tribunal upheld the Commissioner's decision to grant abatement of duty for the period when the machinery was not available to the respondent, emphasizing the procedural precautions regarding intimation and sealing under the compounded levy scheme. The judgment highlights the importance of considering practical implications on production capacity when determining duty liability under such schemes.