2002 (9) TMI 599 - Commission - Central Excise

Issues Involved:
1. Duty liability under compounded levy scheme.
2. Abatement of duty due to non-functioning of one furnace.
3. Admissibility of the settlement application.
4. Interpretation of provisions under Section 3A and Rule 96ZO of the Central Excise Act, 1944.
5. Judicial precedents and their applicability.

Detailed Analysis:

1. Duty Liability Under Compounded Levy Scheme:
The applicant, engaged in manufacturing hot re-rolled products, had opted for the compounded levy scheme under Section 3A of the Central Excise Act, 1944. The Commissioner determined the duty liability at Rs. 10,83,333/- per month. However, the applicant paid only Rs. 7,91,667/-, resulting in a confirmed demand for Rs. 2,91,666/- along with interest and a penalty.

2. Abatement of Duty Due to Non-Functioning of One Furnace:
The applicant argued that one of their furnaces was non-operational between 27-11-99 and 19-12-99 due to a transformer breakdown and sought re-determination of duty liability. Despite following the required procedures and intimating the Respondent Commissioner, no response was received. The applicant expressed willingness to remit the duty amount to avoid multiple proceedings, despite no production or financial benefit during the furnace's downtime.

3. Admissibility of the Settlement Application:
The Bench considered whether the application merited admission. The applicant submitted RT 12 returns and relied on CEGAT decisions, arguing no duty was payable when one furnace was shut down. The Bench noted that the proceedings fell within the definition of a "case" under Section 31(c) of the Central Excise Act, 1944, and the application was filed while appeals were pending before the Commissioner (Appeals).

4. Interpretation of Provisions Under Section 3A and Rule 96ZO:
The Bench discussed the provision for abatement under the proviso to sub-section (3) of Section 3A, which allows abatement if the factory remains closed for a minimum of 7 days. However, it was noted that abatement applies if the entire factory is closed, not just a part. The applicant's reliance on CEGAT decisions was found to pertain to unit closure, not partial furnace shutdown.

5. Judicial Precedents and Their Applicability:
The dissenting member, Shri K.P. Sridhara Raman, argued that the application lacked fresh disclosure of duty liability not previously disclosed to the Central Excise Officer. He cited a similar case, M/s Met-Pro Industries Pvt. Limited, where the application was rejected as it did not disclose additional duty liability. However, the majority of the Bench distinguished this case from the cited precedent and noted similar applications were admitted in other cases like M/s ARS Metals Limited and M/s Ashirwad Steels & Alloy Pvt. Ltd.

Conclusion:
By a majority decision, the application was allowed to proceed under Section 32F(1) of the Central Excise Act, 1944. The applicant was directed to pay the admitted duty amount of Rs. 2,91,666/- within 30 days. The Bench acquired exclusive jurisdiction to exercise the powers and functions of any Central Excise Officer as provided under sub-section (2) of Section 32-I of the Central Excise Act, 1944.

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