2015 (4) TMI 929 - AT - Central Excise

Rejection of rebate claim - Pan Masala Packing Machines - Abatement claim on pro rata basis - Held that - From the language of Rule 10 it is clear that for claiming abatement under Rule 10, there must be total stoppage of the machines which have to be sealed in such a manner that same cannot be operated and besides this, there should be no clearances of any specified goods during the period of stoppage of production for which abatement has been claimed. From the objectives of notifying the goods for assessment and collection of duty based on capacity of production, as mentioned in Section 3A(1) of the Central Excise Act, 1944 and from perusal of the Rules framed under Section 3A(1), it is clear that these rules Shave been framed keeping in view the widespread duty evasion by Pan masala/Gutka manufacturers and the provisions of various rules of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 including Rule 10 thereof must be seen in this background. The interpretation of Rule 10 sought by the appellant would be not only against the provisions of this rule but would also be against the smooth functioning of the system of collection of duty from Gutka/Pan masala units, as envisaged under these Rules. It appears that it is not the case of the appellant that during the period of abatement, there was total stoppage of production and clearances. - There is very much clear that there should be complete stoppage of the machine which is not in the matter in hand. Therefore, I find that both the lower authorities have concluded correctly that the appellant has not satisfied the condition of the grant of abatement as production in the factory of the notified goods was in operation. Therefore, I hold that the appellant is not entitled for abatement. - Decided against assessee.

Summary

Issues:
1. Rebate claim rejection by lower authorities.

Analysis:
The appellant, engaged in manufacturing Branded Chewing Tobacco, filed a rebate claim of Rs. 7,12,500/- for non-operative period of a packing machine. The authorities rejected the claim citing non-compliance with Packing Machine Rules. The appellant operated one machine for part of the month and sought abatement for the non-operative period of the second machine. The Adjudicating authority issued a show cause notice, leading to the rejection of the abatement claim.

The Commissioner (Appeals) upheld the rejection. The appellant contended that duty should not be charged for the full month if the machine operated for part of the month. The lower authorities' findings were reiterated by the Respondent. The Tribunal examined the case, considering the appellant's manufacturing activities, duty payment, and relevant rules under the Central Excise Act, 1944. Rule 10 of the Packing Machine Rules, 2008, regarding abatement in non-production scenarios, was crucial.

Rule 10 mandates complete stoppage of production for at least 15 days with prior intimation to authorities. The machines must be sealed to prevent operation during the stoppage, with no manufacturing or removal of goods allowed. The Tribunal found that the appellant did not fulfill the conditions for abatement. The Rule aims to prevent duty evasion by ensuring proper assessment and collection. As there was no total stoppage of production in the factory during the claimed abatement period, the appellant was deemed ineligible for abatement.

The Tribunal upheld the lower authorities' decision, stating that complete stoppage of the machine was necessary for abatement, which was lacking in this case. Consequently, the impugned order rejecting the rebate claim was upheld, and the appellant's appeal was dismissed.