2017 (3) TMI 608 - AT - Central Excise

Refund claim - abatement - whether on account of failure of the assessee to seek refund of the abatted amount instead of suo motto adjusting the same, the assessee would become liable to pay the said adjusted amount or not? - Held that - Tribunal in the case of Rishi Steel & Alloys Pvt. Ltd. Vs. CCE Aurangabad 2005 (4) TMI 355 - CESTAT, MUMBAI has considered the identical situation and observed that the action of the assessee to adjust the abetted amount suo motto may invite some penal action but will not result in confirmation of duty against them - the order of the original adjudicating authority lays down the correct legal position wherein he dropped the demand but since there was contravention of the provisions the penalty was rightly imposed by him along with confirmation of interest - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty liability under Pan Masala Packing Machines Rules 2008.
2. Excess payment of duty and subsequent adjustment.
3. Proceedings initiated by Revenue regarding abatement of duty.
4. Challenge to the order of the original adjudicating authority.
5. Decision on the adjustment of abated amount by the assessee.
6. Interpretation of rules regarding adjustment of duty amount.

Analysis:
1. The appellant, engaged in gutkha manufacture, operated under Pan Masala Packing Machines Rules 2008, requiring duty deposit based on machine numbers. Abatement could be sought, with duty refund upon compliance.

2. In August 2011, the appellant deposited excess duty due to sealing three machines temporarily. Upon resuming in September, excess duty of ?25,40,322 was abated, but full duty wasn't deposited for that month.

3. Revenue initiated action, alleging unauthorized adjustment of abated amount in September. The original authority found non-compliance with rules and imposed penalties.

4. The appellant challenged the authority's order, contesting interest and penalties. The Revenue also appealed. The appellate authority confirmed the duty demand and imposed penalties, leading to the Tribunal review.

5. The central issue was whether the appellant, by adjusting abated amount without refund, was liable for the adjusted sum. The Tribunal noted the availability of abatement to the assessee but questioned the adjustment method.

6. Referring to a prior case, the Tribunal clarified that adjusting abated amounts might warrant penalties but not confirmation of duty demand. Upholding the original authority's decision, penalties were justified for contravention, while abatement entitlement remained intact.

This comprehensive analysis highlights the duty liability, excess payment, abatement, procedural non-compliance, appellate challenges, and the Tribunal's interpretation regarding abated amount adjustment, ensuring a detailed understanding of the legal judgment.