2002 (2) TMI 164 - AT - Central Excise

Summary

Issues:
1. Duty liability under compounded levy scheme.
2. Calculation of Central Excise Duty.
3. Abatement of duty for factory closure.

Issue 1: Duty liability under compounded levy scheme
The Commissioner (Appeals) upheld the duty liability fixed by the Commissioner, stating that once the unit's capacity is fixed, the assessee must pay the Central Excise Duty based on their production capacity. The appellant had opted for the compounded levy scheme, and their duty liability was set at Rs. 1,66,556 per month. However, in November '97, they paid only Rs. 85,000, leading to a demand for the shortfall. The Commissioner held that the appellant should have followed the prescribed procedure for claiming abatement if the factory was closed for some days. As the appellant failed to do so, the duty as determined by the Commissioner was upheld.

Issue 2: Calculation of Central Excise Duty
The appellant, engaged in the manufacture of re-rolled products, opted for the compounded levy scheme introduced for re-rolling mills. The Commissioner determined the Annual Capacity of Production and required the appellants to pay Central Excise Duty of Rs. 1,66,556.55 per month in two equal instalments. The appellant deposited duty short by Rs. 85,000 in November, leading to a demand for the shortfall. The authorities maintained that duty had to be paid for the whole month as per the scheme, even if the factory operated for fewer days.

Issue 3: Abatement of duty for factory closure
The appellant argued that since the factory operated for only 13 days in November, they paid duty on a pro-rata basis for those days. They contended that the demand for the full month's duty was incorrect. The appellant's counsel emphasized that as the factory worked for only 13 days, there should be no further demand. However, the authorities reiterated that duty had to be paid for the entire month as per the scheme, and the demand was justified. The Tribunal concurred, stating that duty had to be deposited for the whole month under the rule, and any abatement for factory closure had to be claimed following the prescribed procedure. Consequently, the appeal was rejected based on the legal requirement to pay duty for the entire month, regardless of the actual days of operation.