Compounded levy duty cannot attach to installed machinery that was not utilised after prior intimation.

Compounded levy duty under Rule 96ZB of the Central Excise Rules, 1944 was considered in relation to cold rolling machines that remained physically installed but had stopped functioning and were not operated after prior intimation to the department. The rule and the connected notification were read together, and the use of the term "utilised" was treated as significant in assessing liability. On harmonious construction, duty could not be fastened merely because the machines continued to be installed when they were admittedly not in use. The demand was therefore unsustainable for the period of non-utilisation, and relief followed.

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Issues: Whether compounded levy duty under Rule 96ZB of the Central Excise Rules, 1944 was payable on cold rolling machines that were installed in the factory but had stopped functioning and were not utilised after prior intimation to the department.

Analysis: The levy under the scheme was fixed per machine installed, but the notification issued under Rule 96ZB used the expression "utilised". The machine had originally been installed and used, but it later stopped functioning because of its old condition, and the assessee had informed the department in advance that the machines would not be operated. The provisions relating to change in the number of installed machines also contemplated that the factual position could change, subject to intimation and approval. Reading the rule and notification together by harmonious construction, the liability could not be fastened merely because the machines continued to remain physically installed when they were admittedly not being used.

Conclusion: The duty demand was not sustainable for the period when the two machines were not utilised, and the assessee was entitled to relief.

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