2012 (11) TMI 723 - AT - Central Excise

Abatement in case of non-production of goods - production / capacity based duty - packing machines were sealed on 31-1-2010 by the departmental officers. The machines were unsealed on 2-3-2010. The appellants claimed abatement from 1-2-2010 to 1-3-2010 which is a continuous period in excess of 15 days - whether the continuous period from 1-2-2010 to 1-3-2010 can be considered as one single continuous period or whether it consists of two periods namely from 1-2-2010 to 28-2-2010 and a separate period of one day namely 1-3-2010 Held that - There is nothing stated in Rule 10 to the effect that a continuous period falling under different calendar months should be split into periods falling under each month and abatement determined separately. The fact that duty liability is determined for each month separately cannot be reason to read extra words into the said Rule. So long as the days of closure are continuous, even if the days fall in different calendar months it will constitute one continuous period and the abatement under Rule 10 is to be determined accordingly - appeal succeeds

Summary

Issues: Interpretation of Rule 10 regarding abatement from duty liability for non-production of goods for a continuous period exceeding 15 days.

In this case, the Appellate Tribunal CESTAT, New Delhi considered the issue of abatement from duty liability under Rule 10 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. The appellants, who were manufacturers of Pan Masala and Gutka, claimed abatement for a continuous period from 1-2-2010 to 1-3-2010, exceeding 15 days. The dispute arose as to whether this period should be considered as one continuous period or split into two separate periods due to falling in different calendar months. The lower authorities held that these were two distinct periods, with the latter being only one day, and denied abatement for that day. The appellants contended that the Rule does not mandate splitting a continuous period falling in different months. They argued that as long as the closure days are continuous, even if across different months, it should be treated as one continuous period for abatement purposes.

The Tribunal analyzed the arguments presented by both sides and observed that Rule 10 does not explicitly require splitting a continuous period spanning different calendar months. It noted that duty liability is determined monthly, but this does not necessitate interpreting Rule 10 to split continuous closure days across months. The Tribunal held that as long as the closure days are continuous, irrespective of falling in different months, it constitutes one continuous period for abatement calculation under Rule 10. Consequently, the Tribunal ruled in favor of the appellants, allowing the appeal and ordering accordingly. The Tribunal emphasized that the abatement under Rule 10 should be determined based on the continuous closure period, even if it spans across different calendar months. The judgment clarified that the interpretation of Rule 10 should focus on the continuity of closure days rather than the months in which they fall.