Compounded Levy Scheme: duty must be re-determined on actual production once the assessee opts out.

An assessee covered by the Compounded Levy Scheme has a right to opt out and have duty liability re-determined on the basis of actual production from the date and time of that option. An order fixing liability only under the compounded levy regime, contrary to the binding remand directions and the applicable legal position, cannot stand. The matter was therefore set aside and remitted for fresh determination after hearing both sides, in accordance with Section 3A(4) and 3A(5) of the Central Excise Act, 1944.

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Issues: Whether the assessee was entitled to opt out of the Compounded Levy Scheme and have duty liability re-determined on the basis of actual production under Section 3A(4) and 3A(5) of the Central Excise Act, 1944.

Analysis: The impugned order did not comply with the earlier remand directions and was inconsistent with the binding ratio that an assessee has a right to opt out of the Compounded Levy Scheme and pay duty on actual production. The authority below had taken a contrary view and fixed liability only under the compounded levy regime.

Conclusion: The assessee's contention was accepted and the duty liability was required to be re-determined on the basis of actual production from the date and time of the option, after hearing both sides.

Final Conclusion: The order under challenge was set aside and the matter was sent back for fresh determination in accordance with the binding legal position.

Ratio Decidendi: Where the law permits an assessee to opt out of the Compounded Levy Scheme, duty liability must be determined on the basis of actual production from the date of such option, and an order contrary to that principle cannot stand.

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