2012 (9) TMI 883 - AT - Central Excise

Duty demand - Abatement of duty - Held that - In case of Pan Masala/Gutkha manufacturing units, the duty liability is required to be discharged under the provisions of Section 3A of the Central Excise Act, 1944 read with PMPM Rules, 2008. According to the provisions of Rule 7 of the PMPM Rules, duty payable by a unit for a particular month shall be calculated by application of the appropriate rate of duty specified in the Notification No. 42/2008-C.E., dated 1-7-2008 to the number of operating packing machine in the factory during the month. In terms of Rule 8 of the PMPM Rules, the number of operating packing machines during a month for the purpose of Rule 7 is to be taken as the maximum number of packing machines installed on any day during the month. However, under Rule 10 of the PMPM Rules, proportionate abatement of duty can be allowed for the period when the entire factory was closed and had not produced or cleared any goods, during a continuous period of 15 days or more, subject to the conditions as specified in this rule. when during first period of closure, the unit was closed from 10-3-2010 to 1-4-2010 and during second period when it was closed from 8-4-2010 to 1-5-2010, the abatement for the entire period including for 1st April 2010 and 1st May 2010 has been correctly allowed. There is nothing in Rule 10 from which it can be concluded that the period of closure should be apportioned calendar monthwise and then it should be considered for abatement under Rule 10. In our view, the department s interpretation of Rule 10 is totally incorrect - Decided against Revenue.

Summary

Issues:
1. Interpretation of Rule 10 of Pan Masala Packing Machine Rules regarding abatement of duty during factory closure periods.

Analysis:
The judgment deals with appeals by the Revenue regarding the abatement of duty claimed by a manufacturer of Gutkha and Pan Masala during factory closure periods. The dispute arose when the Commissioner reviewed the Assistant Commissioner's decision to grant abatement for short closure periods of 1st April 2010 and 1st May 2010, stating that abatement can only be granted for a continuous period of 15 days or more in a month. The Revenue filed review appeals under Section 35E(4), which were dismissed by the Commissioner (Appeals), leading to the current appeals.

The main contention was whether the abatement under Rule 10 of the Pan Masala Packing Machine Rules should be considered on a monthly basis only. The Revenue argued that duty payment is required on a monthly basis, thus abatement should also be calculated monthly. However, the Tribunal noted that Rule 10 allows abatement for any continuous period of 15 days or more when the factory does not produce goods, subject to specific conditions.

The Tribunal analyzed Rule 10, emphasizing that for abatement, the closure period must be continuous for 15 days or more, with specific intimation to the authorities and sealing of packing machines. The rule does not mandate that the closure period should fall within a single calendar month. Therefore, the Tribunal found the department's interpretation incorrect and upheld the abatement allowed for the closure periods spanning over two consecutive months.

In conclusion, the Tribunal dismissed the Revenue's appeals, stating that the abatement for the entire closure periods, including 1st April 2010 and 1st May 2010, was correctly allowed. The judgment clarifies the conditions for abatement under Rule 10 and highlights that the closure period need not be confined to a single calendar month for granting abatement.

(Order & Pronounced in the open court)