2004 (12) TMI 584 - AT - Central Excise

Summary

Issues:
Denial of abatement claim under Rule 96ZQ(7) for textile processing activity closure; Interpretation of closure requirements for abatement eligibility.

Analysis:

1. The appellant, a textile processor under compounded levy scheme, filed an appeal against the denial of abatement claim for the period from 16-3-2000 to 31-3-2000 under Rule 96ZQ(7). The appellant had informed the Central Excise office about the closure of the stenter machine through a letter dated 10th March, 2000. The central issue revolved around the timeliness of the closure intimation and the interpretation of closure for abatement eligibility.

2. The impugned order rejected the abatement claim citing two grounds. Firstly, it stated that the appellant failed to inform in writing about the closure "at least three days prior to the date of the closure." Secondly, it argued that abatement applied "only on complete closure of the factory" and not on the closure of a single stenter machine. The Deputy Commissioner reported that only the fabric section of the factory was closed, leading to the rejection of the abatement claim.

3. The appellant contended that the impugned order was erroneous on both counts. They argued that the closure intimation was timely as per the General Clauses Act, and the closure of the single stenter machine should be considered as the closure of the factory since all processing activities had ceased. The appellant emphasized that dismantling the machinery signified the permanent discontinuation of processing activities at the premises.

4. The learned DR supported the Commissioner's findings, highlighting the delayed intimation and the reported closure of only the fabric section by the Deputy Commissioner. However, the Tribunal found the Commissioner's reasoning flawed. The intimation for permanent closure was filed on 13-3-2000, three days before the closure date of 15-3-2000, making it timely. The abatement should have been allowed after three days from filing the intimation, not denied for the entire period.

5. The Tribunal emphasized that the closure of the single stenter machine should have been considered as the closure of the factory, as it constituted the entirety of the processing activity. The impugned order lacked substantial evidence to refute the complete closure of the factory. The Tribunal referred to a previous decision in support of the appellant's case and concluded by setting aside the impugned order and allowing the appeal with consequential relief.

6. In conclusion, the Tribunal ruled in favor of the appellant, overturning the denial of abatement claim and emphasizing the importance of timely intimation and the correct interpretation of closure for abatement eligibility in the context of textile processing activities.