2004 (1) TMI 253 - AT - Central Excise

Summary

Issues involved:
Interpretation of Rule 96ZO(3) of the Central Excise Rules regarding abatement of duty in case of unit closure; applicability of Supreme Court judgments in CCE & C v. Venus Castings (P) Ltd. and Union of India v. Supreme Steel & General Mills; necessity of issuing notice under Section 11A of the Central Excise Act for recovery; relevance of Tribunal decisions in Malviya Steel Ltd. v. CCE, Jaipur and Mohinder Steels Ltd. v. CCE, Chandigarh.

Analysis:
The main issue in this case revolves around the interpretation of Rule 96ZO(3) of the Central Excise Rules concerning the entitlement to abatement of duty when a unit remains closed for a specified period. The Revenue challenged the findings in the impugned order that allowed abatement of duty in such cases. The Revenue argued that the impugned order contradicted established legal principles set by the Supreme Court in previous cases. The respondent/assessee, on the other hand, contended that the proviso to sub-section (3) of Section 3A specifically allows for abatement of duty in case of unit closure, citing relevant Tribunal decisions to support their position.

Upon perusal of the records and considering arguments from both sides, the Tribunal noted that Rule 96ZO(3) does not provide for abatement of duty in the event of unit closure, unlike earlier provisions. The Tribunal highlighted that the Supreme Court had previously ruled that no abatement would be available to a unit working under Rule 96ZO(3). Therefore, the Tribunal ruled in favor of the Revenue, holding that the learned Commissioner erred in allowing the abatement of duty in the respondents' cases. Consequently, the impugned orders were set aside, and the appeals were allowed.

Additionally, a separate issue raised in the appeal was the necessity of issuing a notice under Section 11A of the Central Excise Act for recovery. The respondent/assessee argued that recovery was being sought without the proper issuance of a notice. However, the learned SDR contended that for units under the Compounded Levy Scheme, the question of short levy proceedings and recovery under Section 11A did not apply, as the focus was solely on recovering amounts due to the Government. The learned SDR also referred to a Larger Bench decision of the Tribunal to support this position.

In conclusion, the Tribunal's decision clarified the interpretation of Rule 96ZO(3) regarding abatement of duty in cases of unit closure, emphasizing the lack of provision for such abatement in the rule. The Tribunal's ruling in favor of the Revenue was based on established legal principles and previous court judgments, ultimately setting aside the impugned orders and allowing the appeals.