2017 (5) TMI 449 - AT - Central Excise

Principle lex non cogit ad impossibiia - Abatement claim - closure of factory - denial on the ground that intimation regarding closure was not given 15 days prior to that - factory would remain closed w.e.f.30.6.2008 - manufacture of Pan Masala and Gutka - Held that - the N/N. 29/08-CE (NT and 30/08-CE both dated 1.7.2008 came into existence from 1.7.2008 - the appellant filed intimation for closure of the factory on 29.6.2008 which is prior to the introduction of the said Rule but the factory was closed form 1.7.2008 when the rule came into existence. So it is not possible for the appellant to comply with the condition of the notification dated 1.7.2008 on 29.6.2008. Therefore, the principle lex non cogit ad impossibiia, is applicable to the facts of the case - rejection of claim of abatement not sustainable. Scope of SCN - The Commissioner in the impugned order has gone beyond the scope of the SCN - Held that - the observations of the ld. Commissioner (Appeals) are only on assumption and presumption therefore, the impugned order deserves no merit and beyond the scope of SCN. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty demand on Pan Masala and Gutka manufacturing.
2. Closure of factory and eligibility for abatement claim.
3. Compliance with notification requirements for abatement claim.
4. Scope of show cause notice and observations made beyond it.

Issue 1: Duty demand on Pan Masala and Gutka manufacturing:
The appellant, engaged in manufacturing Pan Masala and Gutka, faced a duty demand of ?55,76,618. The appeals related to this demand were clubbed together for a common order.

Issue 2: Closure of factory and eligibility for abatement claim:
The appellant's factory was closed due to lack of orders, with machines sealed under panchnama. The appellant sought abatement for the period of closure, but the claim was denied based on the closure duration and compliance with notification conditions.

Issue 3: Compliance with notification requirements for abatement claim:
The key contention was the appellant's compliance with the notification requirements for abatement claim. The notification required an intimation prior to closure, but the closure date coincided with the introduction of the rule, making compliance impossible. The principle of lex non cogit ad impossibiia was applied to support the appellant's claim.

Issue 4: Scope of show cause notice and observations made beyond it:
The Commissioner's observations went beyond the scope of the show cause notice, questioning the closure date and panchnama details. The Tribunal found the observations to be based on assumptions and not supported by evidence, leading to the setting aside of the impugned orders.

In analyzing the judgment, the Tribunal noted that the appellant's compliance with the notification requirements was impossible due to the closure date aligning with the rule's introduction. Citing legal principles and past judgments, the Tribunal upheld the appellant's entitlement to the abatement claim. The Commissioner's observations were deemed speculative and beyond the show cause notice's scope, lacking factual basis. Consequently, the impugned orders were set aside, and the appeals were allowed, emphasizing the importance of adherence to legal provisions and procedural fairness in tax matters.