Duty deposited for Non-Working period of Steel Rolling Machine not admissible, Refund of Duty sustained: CESTAT [Read Order]

The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that duty deposited for a non-working period of steel rolling machine is not admissible and allowed refund of the same.

The appellant, M/s Mehta Metal Industries engaged in the manufacture of Stainless Steel Cold Rolled Patta/Patti falling under chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant was operating under a compound levy scheme prescribed under Notification No. 17/2007-CE dated 01.03.2007, where the appellant was required to pay Rs. 40,000/- per cold rolling machine per month and deposited Rs. 2,80,000/- for the whole month of October 201.

Theappellant applied for a refund claim of proportionate duty amounting to Rs. 55,483/- for the period in which the machines were non-operational. The adjudicating authority rejected the refund application on the ground that the appellant has not fulfilled the conditions of para 3 & 6 of Notification No. 17/2007-CE dated 01.03.2007 and the facility of abatement on a pro-rata basis is not available to them under the said Notification.

The Commissioner (Appeals-I) dismissed the appeal observing that the machine did not work for a few days in the month and charging of duty every month at the specified rate under the scheme, per machine, does not go beyond the scope of the charging section.

as it nowhere states that duty for a month shall be charged if there is production on each day of the month. It was further observed that in the matter of M/s Jupiter Industries, there was no production for a continuous period of three months and thus the facts are entirely different and not applicable in the instant case.

It was contended that since the case of one machine being inoperative for part of the month after payment of Central Excise duty, has not produced any goods and duty cannot be charged under compounded levy for the whole month.

As per the terms of conditions of para 3 & 6 of Notification No. 17/2007-CE dated 01.03.2007, the facility of abatement on a pro-rata basis was available only to the manufacturers who commence production for the first time or who discontinues production for a continuous period of no less than three months.

Mr Anil Choudhary, member (judicial) held that the appellant is entitled to a refund for the period, the machines remained un-operative for the part of the month ona pro-rata basis. Mr Jitin Singhal appeared for the Appellant and Mr Gopi Raman appeared for the Respondent.

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