2024 (2) TMI 248 - AT - Central Excise

Abatement of duty - Compounded levy scheme - Cold Rolling Machine was dismantled and not in use for manufacture during the disputed period - N/N. 17/2007-CE - HELD THAT - It is an option given to an assessee engaged in manufacture of stainless steel pattas/pattis to pay duty of excise on the basis of number of Cold Rolling Machines installed for cold rolling of such goods. The appellant had initially requested for permission for use of 3(Nos.) of Cold Rolling machines under the notification. Later, on 22.08.2012 they have issued letter informing the department that one machine is not working and that they are dismantling the same. The department has chosen not to respond to this letter. On 07.08.2013, the present show cause notice has been issued alleging that the notification does not provide for abatement. In fact, the appellant has not requested for any abatement. They have informed the department that they have dismantled one Cold Rolling machine and are using only two Cold Rolling machines for which they discharged the duty. The department has no case that the appellant had not dismantled the Cold Rolling machine or that during the disputed period the appellant was using all three Cold Rolling machines. The duty of excise cannot be demanded on goods which are not manufactured. The notification provides for special procedure to pay/ collect duty in respect of goods manufactured using Cold Rolling machines. The demand of duty during the period when the machine was not used for manufacture of goods is not justified - the demand cannot sustain. For the same reasons, the interest and penalties also require to be set-aside. The impugned order is set aside - The appeal is allowed.

Summary

Issues involved:
The issue in this case is whether the appellant is required to pay duty in respect of a Cold Rolling Machine which was dismantled and not in use for manufacture during the disputed period.

Comprehensive details of the judgment:

1. Background and Initial Proceedings:
The appellant, engaged in the manufacture of "SS Cold Rolled Pattas/Pattis," opted for a special procedure under Notification No. 17/2007-CE for the compounded levy scheme. The appellant had obtained permission to avail the special procedure for three Cold Rolling machines. However, for the disputed period, the appellant paid duty only for two machines as they had dismantled one machine and informed the department about it.

2. Arguments by Appellant:
The appellant argued that they had intimated the department about dismantling one machine and were using only two machines. They contended that since the dismantled machine was not used for manufacturing goods, the duty demand was unjustified. Additionally, they argued against the imposition of penalties.

3. Arguments by Department:
The department reiterated the findings in the impugned order, supporting the duty demand made for the dismantled machine.

4. Tribunal's Decision:
After hearing both sides, the Tribunal analyzed Notification 17/2007-CE and observed that it provides an option for paying duty based on the number of Cold Rolling Machines installed. The appellant had initially requested permission for three machines but later informed the department about dismantling one machine. The Tribunal noted that the department did not respond to this information. It was highlighted that the duty of excise cannot be demanded for goods not manufactured. Therefore, the demand for duty during the period when the dismantled machine was not in use was deemed unjustified. Consequently, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief.

5. Conclusion:
The Tribunal ruled in favor of the appellant, stating that the duty demand for the dismantled Cold Rolling machine, which was not used for manufacturing during the disputed period, was not justified. The interest and penalties imposed were also set aside accordingly.