2018 (11) TMI 218 - AT - Central Excise

CENVAT Credit - Compounded levy scheme - N/N. 17/2007-CE dated 01/03/2007 - whether the appellant s final product manufactured prior to 01/03/2014 as lying in stock, when they opted for compounded levy scheme would attract rate of duty applicable prior to the said date or post the said date? Held that - Admittedly, at the time of the clearance of the goods the appellant was working under the compounded levy scheme and has paid the duty on the said stock in terms of the said scheme - when earlier the assessee shifted from compounded levy scheme to Cenvat Credit scheme, the stock of the goods manufactured during the period of compounded levy scheme was cleared by them at the tariff rates. They have adopted the same pattern while moving back to the compounded levy scheme. The issue is no more res integra and stands settled by the Hon ble Supreme Court in the case of Wallace Flour Mills Company Ltd. V/s Collector of C. Ex 1989 (9) TMI 106 - SUPREME COURT OF INDIA wherein it was held that the rate of duty applicable to the excisable products would be the rate applicable on the date of clearance of the goods. The clearance of the said goods under compounded levy scheme payments are proper and appropriate - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether duty on goods cleared under a compounded levy scheme should be paid at the rate applicable prior to opting for the scheme or post opting for the scheme.
- Whether the rate of duty applicable to excisable products is based on the date of clearance of goods.

Analysis:
1. The case involved the appellant, engaged in the manufacture of Stainless Steel Cold Rolled Patta/Pattii, who shifted to a compounded levy scheme from the Cenvat scheme. The Revenue objected to the duty payment on goods cleared under the compounded levy scheme, demanding payment at the rate applicable before opting for the scheme. The original adjudicating authority confirmed the demand, leading to an appeal resulting in a reduced penalty.
2. The core issue was determining the applicable duty rate for goods manufactured prior to opting for the compounded levy scheme. The appellant cleared the stock under the compounded levy scheme and paid duty accordingly. The appellant's advocate highlighted a consistent pattern of clearing goods at tariff rates during scheme transitions. Citing legal precedents, including the Wallace Flour Mills case, the Tribunal emphasized that duty rate is based on the clearance date, irrespective of the scheme in place. The Commissioner (Appeals) wrongly distinguished the cited cases, leading to the Tribunal's disagreement.
3. The Tribunal concurred with the appellant's position, affirming that the clearance under the compounded levy scheme was correct and rejecting the Revenue's demand for differential duty. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal's decision aligned with the principle that duty rates apply based on the date of goods clearance, as established by relevant legal precedents.