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2017 (7) TMI 758 - AT - Central ExciseRefund claim - Manufacture of Pan Masala - case of appellant is that they operated only 5 machines during the month of August, 2011 from 01.08.2011 to 15.08.2011 and the entire duty of ₹ 62,50,000/- involved on the said five machines was paid on 06.08.2011, also, they stopped complete production of the same from 16th August till the end of August - Held that - The sealing of all machines and the subsequent sealing of 5 machines is not disputed by the department - the provisions of PMPM Rules that Rule 10 specifically provides for abatement of duty paid by an assessee when the machines are not functioning. In the instant case, the appellant has discharged the entire duty liability for the month of August 2011 by calculating the liability based upon the functioning of five machines which were also subsequently closed from 16th August 2011. In my considered view, the abatement that is provided under Rule 10 will be applicable to the appellant herein and Revenue is mandated to refund the said amount which has been collected in excess by them from the respondent. There cannot be any demand of duty from the respondent for the period from 16.08.2011 to 31.08.2011 and having paid the entire duty for the month of August in advance, the respondent is eligible for the refund of the duty paid in excess - appeal dismissed - decided against Revenue.
Issues Involved:
Refund claim for duty paid on machines, application of Pan Masala Packing Machines Rules, compliance with natural justice principles, interpretation of Rule 9 and Rule 10 of PMPM Rules. Detailed Analysis: Issue 1: Refund Claim for Duty Paid on Machines The appellant, a manufacturer of Gutkha and pan-masala, filed a refund claim for duty paid on 5 machines in August 2011. The duty was paid on 6th August 2011, and the machines were sealed on 16th August 2011. The appellant had operated 35 machines in June and July 2011, with duty paid in installments. The refund claim was rejected due to a stay order by the High Court, which the Assistant Commissioner deemed premature. Issue 2: Application of Pan Masala Packing Machines Rules The Assistant Commissioner had fixed duty liability for 35 machines, which the appellant reduced to 5. The 1st Appellate Authority set aside the original order, stating non-compliance with natural justice principles. It was noted that production ceased from 16th August 2011, and the duty for July 2011 could not be enforced due to the High Court stay order. Issue 3: Interpretation of Rule 9 and Rule 10 of PMPM Rules The Revenue argued that Rule 9 mandates payment of defaulted duty before calculating actual duty, while the appellant relied on Rule 10 for abatement when no manufacturing occurs. The counsel cited cases where courts ruled in favor of abatement when no production took place. The Tribunal found that the appellant had paid duty for August 2011 based on 5 machines and stopped production, entitling them to a refund under Rule 10. The Tribunal upheld the 1st Appellate Authority's decision, emphasizing that Rule 10 allows abatement when machines are not functioning. The High Court's ruling in a similar case supported the appellant's claim for a refund. The Tribunal concluded that no duty could be demanded for the period when production ceased, and the appellant was eligible for a refund of the excess duty paid. The decision was deemed correct and legal, with no infirmity found, leading to the rejection of the appeal.
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