2009 (8) TMI 185 - AT - Central Excise

Tribunal overturns Commissioner's decision on excise duty abatement during factory closure

The Tribunal set aside the Commissioner's decision disallowing abatement of central excise duty during factory closure periods, emphasizing the actual ... Appellants are engaged in the manufacture of M.S. ingots availing central excise duty on the basis of annual production capacity fixed by the Commissioner with effect from 1-9-97 under Rule 96ZO(3). The dispute has arisen in this case because the Commissioner in the impugned order has not allowed the abatement of payment of central excise duty for the period during which the factory had remained closed from 1-9-97 to 22-9-97 and from 1-11-97 to 15-1-98. - only one condition under Rule 96ZO(2) that intimation regarding reading of the electricity meter to Assistant Commissioner, Central Excise with a copy to Range Superintendent , Central Excise, has not been fulfilled by the appellants - However, the appellants were not using power supply from electricity board and therefore, they could not have given electricity meter reading. Further, the intimation has not been challenged. We find that all other requirements have been fulfilled and the Department also is not contesting that factory had remained closed but the claim for abatement has been rejected only on the ground that reading of electricity meter has not been given to the Department. Under these circumstances, we consider that rejection was only on technical ground in view of the fact that factory was running only on DG sets and this is not disputed by the Department at all.- The impugned order is set aside and the appeal is allowed Issues:- Disallowance of abatement of payment of central excise duty during factory closure periods.- Requirement of electric meter reading under Rule 96ZO(2) of Central Excise Rules.Analysis:1. Issue: Disallowance of abatement during factory closure periodsThe appellants, engaged in manufacturing M.S. ingots, faced a dispute as the Commissioner did not allow abatement of central excise duty for periods when the factory remained closed. The appellant's factory operated solely on D.G. Sets, leading to closures from 1-9-97 to 22-9-97 and 1-11-97 to 15-1-98. The Assistant Commissioner had granted abatement for the first 15 days of closure, indicating factory non-operation. The Commissioner rejected the claim citing lack of power usage proof and failure to provide electric meter reading as per Rule 96ZO(2).2. Analysis: Requirement of electric meter readingThe appellant argued they did not use electricity board power and thus lacked an electric meter. The Tribunal noted the factory's closure was undisputed, with intimation provided to the Revenue. While the appellants did not fulfill the electric meter reading requirement, all other conditions were met. The rejection was deemed technical as the factory operated solely on D.G. Sets, acknowledged by the Department. The Tribunal concluded that the rejection based solely on the absence of electric meter reading was unjustified, given the factory's actual operational status.3. ConclusionAfter considering submissions, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant. The decision highlighted the technical nature of the rejection concerning electric meter reading, emphasizing the actual non-operation of the factory during the closure periods. The judgment underscored the importance of considering operational realities over technicalities in excise duty matters, ensuring fair treatment for taxpayers in similar situations.