2017 (10) TMI 1171 - AT - Central Excise

Valuation - Compounded Levy Scheme - stainless steel patta/ pattis - During the period under consideration, the Pollution Control Board has closed the factory and there was no production but the department has demanded the duty in regular scheme - Held that - identical issue has come up before the Tribunal in the case of M/s. Sarthi Rubber Industries Pvt. Ltd. vs. CCE & ST, Alwar 2017 (3) TMI 1206 - CESTAT NEW DELHI , where it was held that The closure of units admittedly, beyond the control of the assessee/appellant, is not to be treated as a failure to comply with the provisions and conditions of the notification during the period of forced closure of the units - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Duty liability under compounded levy scheme during non-operation period
- Applicability of charging provision for excise duty
- Interpretation of legal principles from previous cases
- Consideration of closure circumstances in determining duty liability
- Failure to follow special procedure leading to duty demand
- Imposition of penalty under Central Excise Rules

Analysis:
1. Duty Liability under Compounded Levy Scheme: The case involved the appellants' duty liability under a compounded levy scheme during a period of non-operation due to factory closure. The Tribunal referred to a previous case where it was held that excise duty cannot be charged in the absence of manufacturing activity. The Tribunal emphasized that no duty liability can be fixed when there is no production during the material period, as per the charging provision.

2. Interpretation of Legal Principles: The Tribunal analyzed legal principles from previous cases to determine the applicability of the compounded levy scheme and charging provisions. It highlighted that failure to follow the special procedure, such as non-payment of duty during closure, could lead to a demand for differential duty. The Tribunal scrutinized the circumstances of closure and non-operation to assess the duty liability of the appellants.

3. Imposition of Penalty: The Tribunal discussed the imposition of penalties under Central Excise Rules based on the circumstances of the case. It noted that the Original Authority found the penalty not imposable due to factors beyond the appellants' control, such as power supply disconnection. The Tribunal emphasized the need for proper consideration of closure circumstances in determining duty liability and penalties.

4. Decision and Conclusion: Based on the analysis of legal principles and previous cases, the Tribunal set aside the impugned orders confirming the differential duty. It allowed the appeals filed by the appellants, dismissing the appeals by the Revenue for penalty imposition. The Tribunal concluded that the duty demand during the non-operation period was not legally sustainable, leading to the reversal of the orders and the allowance of the appellants' appeals.