2022 (3) TMI 401 - AT - Central Excise

A batement of duty payable - compounded rate on the basis of the number of cold Rolling mills installed in the factory - benefit under N/N. 17/2007- CE dated 01.03.2007 - HELD THAT - N/N. 17/2007- CE dated 01.03.2007 prescribes a fix rate of monthly duty on the maximum number of Cold Rolling Machines installed in the factory. The notification provides for manufacturer to declare and the authorities to accept the Number of machines installed. The joint reading of Clause 3 and 8 of the Notification indicates that the observation of lower authorities that there is no provisions for abatement of duty for cease of work is misplaced. Clause 8 of Notification deals with the situations where the factory ceases to work or reverts to the normal procedure. The Clause 8 does not anywhere indicate if the ceasing of work of the factory is temporary or permanent. The explanation to Clause 8 clearly indicate that the partial ceasing of work will not about to ceasing of work. The clause 8 also the prescribed the manner in which the duty for the month in which the ceasing of work happened is to be calculated i.e. in terms of clause 3 of the notification. The clause 3 of the notification prescribed proportionate duty on the basis of Number of days of operation. It is apparent that the N/N. 17/2007 does not require permanent ceasing of work in order to avail benefit of Clause 8 of N/N. 17/2007. Even temporary ceasing of work after following due procedure can entitle the manufacturer to avail; the exemption - the impugned order cannot be sustained - Appeal allowed.

Summary

Issues:
Confirmation of demand of Central excise duty and interest based on Notification No. 17/2007-CE.

Analysis:
The appeal was filed against the confirmation of demand of Central excise duty and interest by M/s Mahalakshmi Metal Udhyog. The appellant worked under Notification No. 17/2007-CE, which prescribed the levy of Central excise at a compounded rate based on the number of cold Rolling mills installed in the factory. The appellant did not appear for the hearing despite multiple scheduled dates.

The learned Assistant Commissioner pointed out that the appellant had informed the jurisdiction Assistant Commissioner about ceasing work for major repair in July 2011 and sought abatement of duty payable for that month. However, both lower authorities stated that there was no provision in Notification No. 17/2007 for abatement of duty. The learned Assistant Commissioner relied on previous Tribunal decisions to support this stance.

Upon considering the submissions, the Tribunal found that Notification No. 17/2007 prescribed a fixed rate of monthly duty based on the maximum number of Cold Rolling Machines installed in the factory. Clauses 3 and 8 of the Notification were crucial in this context. Clause 8 dealt with situations where the factory ceases to work or reverts to normal procedure, without specifying temporary or permanent cessation. The explanation to Clause 8 clarified that temporary cessation for one or two shifts did not constitute ceasing to work. The Tribunal highlighted that the lower authorities' observation on the absence of provisions for abatement of duty for ceasing work was incorrect.

The Tribunal differentiated the current case from the precedent relied upon by the Revenue, emphasizing that the benefit of the Notification could apply to temporary cessation of work if the due procedure was followed. The Tribunal criticized the previous decision for not considering the relevant clauses of the Notification and deemed it per incuriam. Consequently, the Tribunal concluded that temporary ceasing of work, following due procedure, could entitle the manufacturer to exemption under the Notification. As a result, the impugned order was set aside, and the appeal was allowed.