Compounded levy scheme coverage turns on proof of 415 mm pinion stand installation and use in rolling mill dispute

Coverage under the compounded levy scheme depended on whether the rolling mill's declared 415 mm pinion stand was actually installed and in use. The analysis states that the department's allegation was unsupported because the declaration of mill size predated the amended notification, the expert report was incomplete, and there was no substantial evidence of misrepresentation or non-installation. On that factual basis, the text states that the mill fell outside the scheme and the revenue demand failed.

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Issues: Whether the respondent's rolling mill was of the compounded levy scheme because it had a 415 mm pinion stand, so that duty was not payable under Section 3A of the Central Excise Act, 1944.

Analysis: The dispute turned on the factual correctness of the department's allegation that the 415 mm pinion stand was not in use. The impugned order found that the declaration of 415 mm size had been made before the relevant notification was amended, that the revenue's case rested on an incomplete expert report, and that there was no substantial evidence to show that the respondent had misrepresented the mill size or that the stand was not installed. On that basis, the finding that the mill fell outside the scope of the compounded levy scheme was sustained.

Conclusion: The respondent was not covered by the compounded levy scheme and the revenue's demand failed; the appeal was dismissed, in favour of the assessee.

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