ORDER
K.D. Mankar, Member (T)
1. The appellants are steel rolling mills. They were working under compounded levy scheme (scheme) for payment of duty on rolled products. They obtained permission to work under the scheme in terms of Rule 96ZA of then Central Excise Rules, 1944. Vide their letter dated 30/07/96, the appellants requested the Commissioner of Central Excise that, they would be utilising only four Rolling machines out of five rolling machines and one machine is transferred as hot rolling process with effect from 21/07/96. Through reminder dated 03/09/96, the Commissioner was again informed that the duty was paid for five hot rolling machines under protest, since only four rolling machines were under utilisation. The Commissioner was requested to grant necessary permission. It is noticed that, vide permission dated 10/10/96, the Commissioner Central Excise granted permission for special procedure under the rules and the permission was also renewed for a period starting from 21/07/96 to 21/07/97 for four machines. Consequently the appellants sought refund of duty paid on the fifth machine. The duty was obviously paid under protest and hence there was no other ineligibility in the claim.
2. Refund claim of Rs. 41,250/- filed by the appellants was, however, rejected on the ground of appellant’s failure, in not seeking prior permission in terms of Rule 96ZC(3) of the Central Excise Rules, 1944 before effecting a change in the capacity. The Commissioner (Appeals) also adopted the same reasoning and the claim was rejected. Hence the instant appeal before the Tribunal.
3. Heard both sides.
4. It is seen that, the Rule 96ZC (3), does speak of seeking written approval from the proper officer before making any change in the number of cold rolling mills.
5. Notwithstanding this, the appellants did inform the Commissioner vide their letter 30/07/96 about the change in capacity and such a change, having been accepted in the form of communication from the Commissioner vide Commissioner’s letter dated 10/10/96, the claim for refund of duty paid cannot be denied. There is no dispute or evidence to suggest that the fifth machine was ever utilised in production, and the claim was denied only on the ground of failure to obtain permission.
6. In this connection, I note that, the duty liability is based on the number of machines installed in the factory. Once the number of machines installed is accepted to be four machines as communicated in Commissioner’s letter dated 10/10/96, there is no other requirement that, come in way of fixing a liability on the basis of capacity higher than the capacity ultimately accepted by the Commissioner. It is nobody case here that, the appellants had actually operated more than four machines during the relevant period and violated the permission granted by the Commissioner. It is also seen that, in terms of Rule 96ZG, the Commissioner has the power to condone failure to follow the procedure or comply with any condition laid down in this section within the specified time limit. So if the conditions of Rule 96ZC(3) is considered as violated, in terms of permission dated 10/10/96 granted to the appellants for following the special procedure from 21/07/96 to 31/10/96 in respect of four machines, the said permission has to be deemed to be the one condoning violation of Rule 96ZC (3). Otherwise the permission granted by the Commissioner could have spelt out clearly that the permission is operative from the date of permission itself i.e. from 10/10/96. In the absence of such restricted clause in the permission and express indication that the permission is valid from 21/07/96 to 20/07/97 for four machines, the duty paid on the 5th machine is liable to be refunded as claimed by the appellants.
7. Accordingly the appeal succeeds and the same is allowed with consequential relief in accordance with the law.
(Pronounced in Court on 26/3/2004)