2015 (11) TMI 319 - HC - Central Excise

Contravention of the provisions of rule 7, rule 9 and rule 10 of the PMPM Rules - Assessee not paid appropriate central excise duty by due date and had wrongly taken abatement of duty and adjustment of the same towards payment of duty - Compounded levy scheme - Held that - Assessee did not produce the notified goods during a continuous period of fifteen days in the month of March and accordingly claimed that it was entitled to abatement of duty on a proportionate basis for the period when the factory was not producing notified goods and accordingly adjusted duty to that extent from the duty payable in the month of April. The contention of the revenue is that abatement amounts to refund and, therefore, the procedure for availing refund as laid down under section 11B of the Act is required to be followed. In this regard, it may be noted that the expression abatement has not been defined anywhere in the Act or in the PMPM Rules. Adjustments made were not more than the amounts of duties mandated to be abated as per rule 10 of the PMPM Rules, the action of the respondent assessee in computing the proportionate amount of duty towards the abatement and setting it off against the duty payable in the next month does not adversely affect the revenue in any manner. The abatement, in the opinion of this court, is not akin to refund and means reduction or diminution of the duty. Therefore, when the duty stands reduced to the extent provided in the rule, there is no liability to pay the same, inasmuch as, to that extent the duty stands abated. Therefore, if the assessee has correctly calculated the proportion of duty and set off the same against the duty payable for the next month, it cannot be said that the said action is contrary to the statutory scheme. When the rules do not provide for the manner in which duty is required to be abated, nor do they provide that abatement shall be by an order of the Commissioner or any authority, but nonetheless provide for abatement of duty and the extent of entitlement to such abatement, no fault can be found in the approach of the assessee in suo motu taking the benefit of such abatement. - it cannot be said that the view adopted by the Tribunal is not a plausible view warranting interference by this court. In the absence of any infirmity in the impugned order passed by the Tribunal, it is not possible to state that the same gives rise to any question of law, much less, a substantial question of law - Decided against Revenue.

Summary

Issues Involved:

1. Whether a manufacturer can suo motu abate the duty for factory closure without first depositing the duty.
2. Whether the Tribunal correctly interpreted Rule 10 of the Pan Masala Packaging Machines (Capacity Determination and Collection of Duty) Rules, 2008, by comparing it to Rule 96ZQ of the Central Excise Rules.

Issue-wise Detailed Analysis:

1. Suo Motu Abatement of Duty:

The appellant challenged the Tribunal's decision, arguing that a manufacturer cannot suo motu abate the duty for factory closure without first depositing the duty. The respondent-assessee, engaged in manufacturing Pan Masala and Gutkha, claimed abatement for non-production during a continuous period of 15 days in March 2011 and adjusted this abatement against the duty payable for April 2011. The Department contended that abatement is akin to a refund and requires an order from the Jurisdictional Assistant Commissioner or Deputy Commissioner, as per the Board's circular dated 12th March 2009.

The court noted that the term "abatement" is not defined in the Act or the PMPM Rules and referred to its dictionary meaning, which implies a reduction or diminution of duty, not a refund. Rule 10 of the PMPM Rules does not prescribe any specific procedure for granting abatement, nor does it require an order from the Commissioner. The court concluded that in the absence of any rule specifying the procedure for abatement, the assessee's action of adjusting the abatement against the duty payable in the next month was not in violation of any rule or statutory provision.

2. Interpretation of Rule 10 of PMPM Rules:

The appellant argued that the Tribunal erred in interpreting Rule 10 of the PMPM Rules by comparing it to Rule 96ZQ of the Central Excise Rules. The court examined Rule 10, which provides for abatement of duty on a proportionate basis if the factory does not produce notified goods for a continuous period of 15 days or more, subject to certain conditions. The court noted that unlike Rule 96ZQ, which expressly provides for an order of abatement by the Commissioner, Rule 10 of the PMPM Rules is silent on this aspect.

The court observed that the rule-making authority's omission to include a provision for an order of abatement in Rule 10 indicates a conscious decision. The Tribunal had found that the assessee fulfilled all conditions for abatement under Rule 10 and that the adjusted amount was not more than the duty mandated to be abated. The court held that the Tribunal's interpretation of Rule 10 was plausible and did not warrant interference.

Conclusion:

The court dismissed the appeals, concluding that the Tribunal's decision was well-reasoned and did not give rise to any substantial question of law. The assessee's method of calculating and adjusting the abatement was found to be in compliance with the statutory scheme, and the absence of a specific procedure for abatement in the PMPM Rules supported the Tribunal's interpretation.