Double levy on induction furnace units is impermissible where alloy steel production is ordinary and compounded levy was not opted for.

An induction furnace unit was not liable to be assessed twice where it ordinarily manufactured alloy steel ingots, stainless steel and steel castings, and non-alloy steel production was only incidental. Because the unit had not opted for the compounded levy scheme under Rule 96ZO(3), duty could not be demanded on both a capacity-based method and again at the standard rate on the same manufacturing activity. On the facts found, the standard rate alone applied and the compounded levy demand was not sustained. The appeal succeeded and the impugned duty demand was set aside to the extent it proceeded on an impermissible double levy approach.

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Issues: Whether the unit was liable to duty under the compounded levy scheme under Rule 96ZO(3) of the Central Excise Rules, 1944, and whether duty could also be demanded again at the standard rate on the same manufacturing activity.

Analysis: The scheme introduced for induction furnace units turned on whether the unit ordinarily produced non-alloy steel ingots or ordinarily produced alloy steel products and castings, with non-alloy production being only incidental. The record showed that the assessee had not opted for compounded levy, had sought clarification because of ambiguity in the scheme, and had stated that it ordinarily manufactured alloy steel ingots, stainless steel and steel castings, while non-alloy steel products were incidental. On that basis, the demand could not be sustained on a capacity-based method and again on a standard-rate basis. The authority could not levy duty twice on the same unit by combining the two methods.

Conclusion: The assessee was not liable to be assessed twice, and the standard rate alone was applicable on the facts found. The duty demand under the compounded levy approach was not sustained.

Final Conclusion: The appeal succeeded and the duty demand was set aside to the extent it proceeded on the impermissible double levy approach, with consequential relief admissible in accordance with law.

Ratio Decidendi: Where an induction furnace unit ordinarily produces alloy steel or castings and non-alloy steel production is only incidental, and the unit has not opted for compounded levy, duty cannot be charged both on capacity basis and again at the standard rate on the same activity.

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