Excise duty under Section 3 remains binding when permission is unrevoked; demand under Section 3A cannot stand.

A competent excise authority's unrevoked permission to pay duty under Section 3 remained operative, and the assessee could not be forced onto Section 3A on the same factual basis. The Tribunal noted that the permission had been granted subject to yearly review, but was neither reviewed nor set aside, and the assessee acted consistently with it. It also held that a demand could not be sustained merely on alleged excess Modvat credit or revenue loss where buyers were entitled to credit on duty actually paid under Section 3. The Revenue's challenge therefore failed.

---

---

Issues: Whether the assessee was liable to discharge excise duty under Section 3 or Section 3A of the Central Excise Act, 1944 and whether the permission earlier granted to pay duty under Section 3 remained operative.

Analysis: The Tribunal noted that the jurisdictional Commissioner had permitted the assessee to continue paying duty under Section 3, subject to review at the end of the financial year, and that the said permission was neither reviewed nor challenged. It further found that the assessee had acted in accordance with that permission, and that the departmental case for shifting the levy to Section 3A did not dislodge the finality of the unrevoked orders permitting payment under Section 3. Since the buyers were entitled to avail credit on the duty actually paid under Section 3, the alleged excess Modvat credit and revenue loss could not sustain the demand.

Conclusion: The issue was decided in favour of the assessee, and the Revenue's challenge failed.

Ratio Decidendi: Where a competent excise authority has permitted payment of duty under Section 3 and that permission is neither reviewed nor set aside, the assessee cannot later be compelled to pay under Section 3A on the same factual basis, nor can a demand be sustained merely on an allegation of revenue loss arising from the duty actually paid.

---