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Issues: (i) whether the appellant had opted for payment of duty for the financial year 1998-99 under the Compounded Levy Scheme so as to attract duty liability under Rule 96ZP(3) read with Section 3A of the Central Excise Act, 1944; (ii) whether the proceedings and demand under the Compounded Levy Scheme survived after omission of Section 3A without a saving clause.
Issue (i): whether the appellant had opted for payment of duty for the financial year 1998-99 under the Compounded Levy Scheme so as to attract duty liability under Rule 96ZP(3) read with Section 3A of the Central Excise Act, 1944
Analysis: The record did not disclose any clear and specific option exercised by the appellant for the financial year 1998-99. A request for re-determination of duty on account of change in machinery could not, by itself, be treated as a conclusive expression of continued option under the scheme. In the absence of a proved election to remain under the compounded levy regime for that year, duty could not be fastened on that basis.
Conclusion: The issue was decided in favour of the appellant. No duty was exigible under Rule 96ZP(3) read with Section 3A of the Central Excise Act, 1944 on the footing that the appellant had opted for the scheme for 1998-99.
Issue (ii): whether the proceedings and demand under the Compounded Levy Scheme survived after omission of Section 3A without a saving clause
Analysis: The omission of Section 3A with effect from 11.5.2001, without a saving clause, was held to result in abatement of pending proceedings under the scheme. The earlier Supreme Court decisions relied upon by Revenue were found inapplicable because they did not consider the effect of the omission of the scheme. Following the Gujarat High Court ruling in Krishna Processors, proceedings pending on the date of omission could not continue to a final order under the omitted scheme.
Conclusion: The issue was decided in favour of the appellant. The pending proceedings stood abated and the impugned demand could not be sustained.
Final Conclusion: The duty demand and penalty were set aside, and the appeal was allowed with consequential relief in accordance with law.
Ratio Decidendi: Where no clear option is proved for a later financial year under the Compounded Levy Scheme, and the statutory provision enabling the scheme is omitted without a saving clause, pending proceedings under that scheme abate and no demand can be sustained under the omitted regime.
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