2022 (8) TMI 1248 - AT - Central Excise

Refund claim - Compounded Levy Scheme - entitlement for pro-rata abatement/refund of duty for the period during which the machine admittedly was inoperative - rejection of refund on the ground of time limitation - applicability of N/N. 17/2007-CE dated 01.03.2007 - HELD THAT - The issue herein is squarely covered in favour of the appellant-assessee by the ruling of Hon ble Rajasthan High Court in the case of COLLECTOR OF CENTRAL EXCISE, JAIPUR-II VERSUS JUPITER INDUSTRIES 2006 (4) TMI 164 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR which have been followed by Division Bench of this Tribunal in the case of M/S PARADISE STEELS PVT. LTD. VERSUS CCE CGST, JAIPUR 2018 (9) TMI 1480 - CESTAT NEW DELHI , where it was held that since this is the case of one machine being inoperative for part of the month after payment of Central Excise duty, has not produced any goods and therefore, duty cannot be charged under compounded levy for the whole month. The appellant is entitled to refund for the period, the machines remained un-operative for the part of the month of pro rata basis - revenue is directed to grant the refund of the amount of Rs. 55,483/- from the date of deposit till the date of refund, with interest as per Rules - Appeal allowed.

Summary

Issues:
Whether the appellant-assessee under the 'Compounded Levy Scheme' is entitled to pro-rata abatement/refund of duty for the period of machine inoperability.

Analysis:
The appellant, engaged in manufacturing Stainless Steel Cold Rolled Patta/Patti, operated under a compound levy scheme where they paid a fixed amount per machine per month. The appellant sought a refund for the period two machines were non-operational, as the adjudicating authority rejected their claim citing non-fulfillment of conditions under Notification No. 17/2007-CE. The appellant appealed, referencing a Rajasthan High Court ruling that emphasized no duty can be levied if no production occurs, supporting the refund claim for non-operational machines.

The Commissioner (Appeals) dismissed the appeal, stating that duty is charged monthly per machine under the scheme, regardless of daily production. The Commissioner distinguished the case from a previous ruling involving continuous non-production for three months. The appellant then approached the Tribunal, citing a similar case where a refund was granted for a machine's partial inoperability, supported by the Rajasthan High Court's judgment.

The revenue authority contended that the appellant did not meet the conditions for pro-rata calculations under the Notification, as they neither started production nor ceased it for a continuous period of three months. They referenced rulings from the Division Bench of the Tribunal to support their argument. However, the Tribunal found in favor of the appellant, relying on the Rajasthan High Court's judgment and a previous Tribunal decision, directing the revenue to refund the duty amount for the non-operational period with interest.

In conclusion, the Tribunal ruled in favor of the appellant, holding that they are entitled to a refund for the period of machine inoperability under the 'Compounded Levy Scheme,' as supported by legal precedents and interpretations of relevant notifications and judgments.