2017 (4) TMI 1119 - AT - Central Excise

Abatement - suo-moto calculation - Whether the appellant have the option to suo - moto take abatement of the duty in respect of the period of closure of the factory for a continuous period of 15 days or more, without first depositing duty and without filing any abatement claim before the authorities? Held that - the issue herein is squarely covered by the ruling on of Hon ble High Court of Gujarat in Commissioner Versus Thakkar Tobacco Products P. Ltd. 2015 (11) TMI 319 - GUJARAT HIGH COURT , where it was held that in the absence of any rule or provision or mode of availing abatement, without any order of abatement, by appropriate authority, assessee could on their own calculate duty and set off same against duty payable in the next month and such action of the assessee is not violative of any rule or any provision of law. - no fault can be found in the approach of the assessee in taking suo-moto the benefit of such abatement - the whole issue is revenue neutral - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the appellant is liable to pay Central Excise duty on Pan Masala containing Tobacco and Branded Chewing Tobacco.
2. Whether the appellant can suo-moto take abatement of duty for a period of factory closure without prior deposit or filing a claim.
3. Whether the appellant's adjustment of excess duty paid in the previous month towards the current month's duty liability is permissible.

Analysis:

Issue 1: Liability to pay Central Excise duty
The appellant manufactured Pan Masala containing Tobacco (Gutkha) and Branded Chewing Tobacco. Both products were specified goods subject to Central Excise duty based on production capacity under the Central Excise Act, 1944. The duty rates were specified for each product, and the appellant was required to pay duty accordingly.

Issue 2: Suo-moto abatement of duty
The appellant's factory was closed for 24 days in March 2011, during which no production occurred. The appellant paid duty for the full month despite the closure. In April 2011, the excess duty paid in March was adjusted against the duty liability for that month. The issue was whether the appellant could take abatement of duty for the closure period without prior deposit or filing a claim.

Issue 3: Adjustment of excess duty
A show cause notice was issued to the appellant for short payment of duty in April 2011 due to adjusting the excess duty paid in March. The Commissioner confirmed the demand, stating that the appellant's suo-moto credit of excess duty was not in accordance with the law. The appellant argued that such adjustment was permissible based on a ruling by the Gujarat High Court and that the decision cited by the Revenue was not applicable in this case.

Judgment:
The Tribunal found that the issue was revenue-neutral and relied on the Gujarat High Court ruling, allowing the appellant to take suo-moto abatement of duty. The Tribunal held that the appellant's action of setting off excess duty against the next month's liability was not violative of any rule or statutory scheme. Consequently, the appeal was allowed, and the impugned order was set aside, providing the appellant with consequential benefits as per the law.

This detailed analysis highlights the key legal aspects and arguments presented in the judgment, focusing on the issues of Central Excise duty liability, abatement of duty, and adjustment of excess duty payment.