2016 (11) TMI 934 - AT - Central Excise

Refund claim - compounded levy scheme - abatement in case of non-production of goods - The appellant started production of Gutkha under compounded levy scheme w.e.f. 01/04/2011 with one machine and paid the duty under the compounded levy scheme. Subsequently the appellant installed another machine on 16/04/2011 and commenced production from 16/04/2011 onwards. - Held that - Rule 10 of the PMPM rules speaks about the abatement in case of non-production of goods. That the said Rule states that when the factory did not produce the notified goods during any continuous period of fifteen days or more, the y duty calculated on a proportionate basis shall be abated in respect of such period provided the manufacturer follows the procedure laid down therein. In the instant case, the authority below has denied the abatement stating that the relevant provision is not applicable to the appellant since during the period prior to 16/04/2011, the appellant had not installed the machines in the factory. It is not disputed that the appellant paid whole duty of ₹ 12,25,000/- for the whole month against the second machine. It is also not disputed that the second machine was neither installed nor operated during the period from 01/04/2011 to 15/04/2011 (both days inclusive). Rule (C) provides that appellant is eligible for abatement during the period for which goods were not produced if such period is not less than 15 days. In case, appellant has paid duty for whole month) as per compounded levy scheme, this Rule would help the appellant to get abatement for the period when goods are not produced. This is because no duty can be demanded when goods are not produced. Again, as per Rule 18, the appellants are not liable to pay duty upon the goods which are not produced by them as per the Central Excise Act and Rules. Therefore considering Rule 10 as well as the provisions of Central Excise Act, I am of the view that the appellants are entitled to abatement. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of abatement claim under Rule 10 of the Pan Masala Packing Machines Rules.
2. Interpretation of Rule 10 in the context of non-production of goods.
3. Applicability of abatement when goods are not produced for a specific period.
4. Comparison of duty paid under compounded levy scheme against actual production.

Analysis:
1. The case involves the denial of abatement claim under Rule 10 of the Pan Masala Packing Machines Rules. The appellant, a manufacturer of Gutkha, paid duty under the compounded levy scheme for two machines. A refund claim was filed for the excess amount paid, which was denied by the original authority and upheld by the Commissioner (Appeals), leading to the appeal.

2. The appellant argued that they did not produce goods using the second machine during a specific period, justifying the abatement claim. The respondent, however, contended that as two machines were installed during the relevant time, the duty paid was correct, and abatement was not applicable.

3. Rule 10 of the PMPM rules addresses abatement in cases of non-production of goods for a continuous period. The Tribunal noted that the appellant had paid duty for the entire month against the second machine, which was not installed or operated from 01/04/2011 to 15/04/2011. Rule (C) allows abatement for periods of non-production exceeding 15 days, aligning with the principle that duty cannot be demanded when goods are not produced. Rule 18 further supports that duty is not payable on goods not produced under the Central Excise Act and Rules.

4. The Tribunal, referencing the case law of CCE, Jaipur-II vs. Jupiter Industries, concluded that the appellants were entitled to abatement under Rule 10 and the Central Excise Act. The impugned order denying the abatement claim was set aside, and the appeal was allowed with consequential reliefs, if any, emphasizing the importance of abatement provisions when goods are not produced.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the final decision rendered by the Tribunal, providing a comprehensive understanding of the case.