2015 (11) TMI 368 - AT - Central Excise

Duty demand under sub-rule (3) of Rule 96ZO of Central Excise Rules, 1944 - Compounded levy scheme - Held that - According to the appellant, the letter was sent Under Postal Certificate (UPC) and the receipt thereof is not traceable. Under the provisions of Rule 195 of the Indian Post Office Rules , 1933 Certificate of Posting is granted to the public to afford an assurance that letters and other articles for which no receipts are granted by the Post Office and entrusted to servants and messengers for posting have actually been posted. Therefore, the seal of UPC at best can only presume that the letter was sent. It cannot draw any presumption that the letter was served/delivered to the addressee. In the present case, the respondent have not only disputed the receipt of the letter but also its veracity. The burden rests heavily upon the appellant to establish that the said letter was served on the respondent - A letter sent under UPC does not give any presumption that the same is served upon the addressee. In this case, the respondent has not only disputed receipt of the letter but also its veracity i.e. photocopy of the letter produced by the appellant. On analyzing, the facts, evidence and the law placed before us, we are not able to hold that the letter dated 26.5.1998 had reached the office of the Commissionerate. Therefore, the contention of the appellant that they had informed the Department by letter dated 26.5.98 stating that the appellant opted out of the compounded levy scheme, does not find favour with us. Department by its letter dated 22.10.1997 had passed the order determining the annual capacity of production of the appellant. In the said letter, the appellant was granted 10 days time to file objection. The appellant did not file any objection and has paid duty as determined during first month. It is obvious that the appellant had consented to the compounded levy scheme. - appellant cannot opt out of the scheme for the disputed period, after exercising his option to pay duty under sub-rule (3) of Rule 96ZO. Therefore, the duty demand of ₹ 7,26,352/- is sustainable. - However, penalty is set aside - Decided partly in favour of assessee.

Summary

Issues involved:
Challenge to duty demand under sub-rule (3) of Rule 96ZO of Central Excise Rules, 1944 based on annual capacity production determination.

Detailed Analysis:

1. Facts and Background:
The appellant, engaged in manufacturing MS ingots, opted for the compounded levy scheme under Central Excise Rules. The Commissioner determined the annual capacity of the furnace, leading to a duty payment requirement. The appellant deposited a partial amount within the stipulated period, leading to a show cause notice for recovery of outstanding duty, interest, and penalties.

2. Contentions and Defense:
The appellant contended that they had revoked the option for compounded levy scheme and opted for duty payment based on actual production. The duty demand was confirmed by the Joint Commissioner, who imposed penalties under Rule 209. The appellant's claim of sending a revocation letter was disputed.

3. Appellate Process:
The appellant appealed to the Commissioner (Appeals) and subsequently to the Tribunal. The Tribunal remanded the matter for further consideration on the receipt of the alleged revocation letter. The Commissioner (Appeals) upheld the duty demand, leading to the present appeal.

4. Analysis of Alleged Revocation Letter:
The crucial issue was whether the revocation letter dated 26.5.98 was received by the Commissionerate. The burden of proof lay on the appellant to establish the receipt. The Tribunal emphasized the need for concrete evidence, citing legal precedents on the reliability of letters sent under UPC.

5. Legal Interpretation and Precedents:
Even if the revocation letter was sent, it would not absolve the appellant of duty payment based on annual capacity determination. The Tribunal referred to legal judgments emphasizing that once an assessee opts for a particular scheme, switching to another scheme during the same financial year is impermissible.

6. Decision and Penalty Imposition:
The Tribunal upheld the duty demand but set aside the penalty imposed under Rule 209, as the default penalty was already covered under sub-rule (3) of Rule 96ZO. The final order modified the penalty while affirming the duty demand, partially allowing the appeal.

7. Conclusion:
The Tribunal's decision highlighted the importance of adhering to chosen excise duty payment schemes and the legal consequences of attempting to switch schemes mid-year. The case serves as a reminder of the significance of proper documentation and compliance with excise duty regulations.

This detailed analysis covers the key legal aspects and arguments presented in the judgment, providing a comprehensive understanding of the case and its implications.