2013 (1) TMI 558 - AT - Central Excise

Abatement of duty in case of non-production of goods - Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 Whether continuous non-production of excisable goods for 15 days should be during a calendar month - Assessee is engaged in manufacture of Gutkha - Duty on the basis of packing machine - Excisable item, under Chapter 24 - Department argued that 15 days continuous period of non-production which entitle the assessee to abatement has to be in a given calendar month Held that - The plea taken by department misconceived and is based on incorrect reading of Rule 10. Bare reading of the Rule shows, an assessee is entitled to abatement provided there has been no production in the factory for a continuous period of 15 days. The rule nowhere provides that continuous non-production of excisable goods should be during a given calendar month. There was no production in the factory of the assessee for a continuous period of 36 days. Therefore, claim of the assessee for abatement is fully justified. In favour of assessee

Summary

Issues Involved:
Interpretation of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 regarding abatement claim for non-production of goods.

Detailed Analysis:

Issue 1: Interpretation of Rule 10 of Pan Masala Packing Machines Rules
The appeal was against an order setting aside the rejection of an abatement claim under Rule 10 of the Pan Masala Packing Machines Rules. The rule allows for abatement of duty if there is no production of notified goods for a continuous period of fifteen days or more, subject to certain conditions. The respondent, engaged in manufacturing Gutkha, requested sealing of packing machines for a period and subsequently applied for abatement of excise duty for the days of non-production. The department contested the claim, arguing that the non-production period must be within a given calendar month to qualify for abatement.

Issue 2: Application of Rule 10 to the Case
The undisputed facts revealed that there was no production in the factory for a continuous period of 36 days, during which the packing machines were sealed. The respondent applied for abatement for the first 5 days of April 2011, which fell within this non-production period. The department's contention that the non-production period must be limited to a calendar month was rejected by the Commissioner (Appeals), who allowed the abatement claim. The department appealed, arguing for a strict interpretation of Rule 10 based on calendar months.

Issue 3: Judicial Interpretation of Rule 10
The Tribunal analyzed Rule 10 and held that the rule does not specify that the continuous non-production period must be within a given calendar month. Instead, it requires a continuous period of 15 days without production to qualify for abatement. As there was no production for 36 days in the factory, the abatement claim for the specific days was deemed justified. The Tribunal dismissed the appeal, upholding the Commissioner's decision to allow the abatement claim based on the correct interpretation of Rule 10.

In conclusion, the Tribunal affirmed that the abatement claim was valid as per the clear provisions of Rule 10, emphasizing the requirement of a continuous non-production period without specifying it to be within a particular calendar month. The appeal was dismissed, and the decision to grant abatement was upheld.