Compounded levy refund permitted when duty was collected after machine dismantling under the special excise procedure.

Compounded levy duty under the special scheme was payable with reference to the machine and its prescribed method of calculation, but not for a machine that had been dismantled and removed. Once the cold rolling machine had ceased to exist, continued collection of duty for the later period was excess payment over the amount legally payable. A refund claim of such excess duty was maintainable under Section 11B of the Central Excise Act, and neither the special levy rules nor Section 11B barred refund. The refund was therefore admissible and denial of refund was unsustainable.

---

---

Issues: Whether duty paid under the compounded levy scheme remained recoverable after the cold rolling machine had been dismantled and removed, and whether refund of the excess amount was admissible.

Analysis: The compounded levy provisions fixed payment of duty per machine and prescribed the manner of calculation, but they did not contemplate continued duty liability for a machine that had ceased to exist after dismantling. The refund claim had to be considered under Section 11B of the Central Excise Act, under which excess duty paid is refundable if found to be due. Since the machine had been dismantled and duty was nevertheless collected for the subsequent period, the amount paid was in excess of the sum legally payable under the special procedure. There was no prohibition in the special levy rules or in Section 11B against refund of such excess payment.

Conclusion: The refund was admissible and the denial of refund was unsustainable; the appeal was allowed in favour of the assessee.

---