2018 (5) TMI 663 - AT - Central Excise

Abatement claim - closure of one furnace installed in the factory - Manufacturing of steel products - duty was to be discharged based on Annual Capacity of Production (ACP) - whether the appellant is eligible for abatement on pro-rata basis when only one of the furnaces were closed? - Held that - The jurisdictional High Court in the case of Chamundi Steel Castings India Ltd. 2018 (2) TMI 379 - CESTAT CHENNAI had considered the very same issue and held that the claim of the assessee for pro-rata basis is to be allowed - rejection of abatement is unjustified. The appellant is eligible for abatement for the period from 20.4.1998 to 13.7.1998 as claimed to the tune of ₹ 13,76,881/- - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for abatement on pro-rata basis when only one furnace was closed.
2. Interpretation of Rule 96ZO(3) of the Central Excise Rules, 1944 regarding duty calculation.

Analysis:
1. The case involved a dispute regarding the appellant's eligibility for abatement on a pro-rata basis during a period when one of the furnaces was closed. The appellant, engaged in steel product manufacturing, had filed abatement claims for the period of closure. The Commissioner disallowed a significant claim of &8377; 13,76,881/- stating that the factory cannot be considered fully closed as goods were produced in the operational furnace. The Hon'ble High Court previously set aside the Commissioner's order, allowing abatement claims in similar cases. The Tribunal, following precedent, held that the rejection of abatement was unjustified, ruling in favor of the appellant's eligibility for the claimed abatement amount.

2. The interpretation of Rule 96ZO(3) of the Central Excise Rules, 1944 was crucial in determining the duty calculation methodology. The rule specified duty payment based on the total furnace capacity, with provisions for pro-rata calculation if capacities varied. The High Court emphasized the rule's applicability for duty calculation and the Commissioner's obligation to consider evasion risks for specific commodities. The Tribunal, aligning with the High Court's decision, upheld the appellant's entitlement to abatement based on the pro-rata calculation method outlined in Rule 96ZO(3). Consequently, the impugned order disallowing a portion of the abatement claim was set aside, granting the appellant relief for the claimed amount of &8377; 13,76,881/-.

In conclusion, the judgment resolved the issues by affirming the appellant's eligibility for abatement on a pro-rata basis during furnace closure and interpreting Rule 96ZO(3) to support the duty calculation methodology. The decision provided clarity on duty liabilities for manufacturers under the Central Excise Rules, ensuring fair treatment based on production circumstances and legal provisions.