2017 (10) TMI 69 - AT - Central Excise

Interpretation of Statute - notified goods - Rule 10 of the Pan Masala Packing Machine Rules, 2008 - Compounded Levy Scheme - refund/abatement claim - rejection of said refund/abatement claim on the ground is that the word used in the second clause first proviso of Rule 10 is goods and not notified goods and therefore no removal of goods including inputs should have been effected by the appellant during the closure period from 16/10/2009 to 31/10/2009 - Held that - the word goods used in the second part of the first proviso to Rule 10 of the PMPM rules indicates only notified goods and nothing else. By no stretch of imagination, the word goods includes inputs - in the several provisions of the Central Excise Act and the Rules the word inputs has been used exclusively and never interchangeably with the words goods. Further, this interpretation is also substantiated by the amendment of the the said PMPM Rules, 2010, wherein the word notified has been added before the word goods in the second part of the first proviso to the said Rule 10. The said amendment was brought by N/N. 8/2010-CE (NT) dated 27/02/2010. The intention of legislature has been clarified by the subsequent amendment that the word goods appearing in the second part of the first proviso are only notified goods and nothing else - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Interpretation of Rule 10 of the Pan Masala Packing Machine Rules, 2008.
2. Whether the word "goods" in the second clause of the proviso includes inputs or refers only to "notified goods."

Issue-wise Detailed Analysis:

1. Interpretation of Rule 10 of the Pan Masala Packing Machine Rules, 2008:

The core issue in this appeal revolves around the interpretation of Rule 10 of the Pan Masala Packing Machine Rules, 2008 (PMPM Rules). Specifically, the first proviso of Rule 10 states: "provided that during such period, no manufacturing activity, whatsoever, in respect of notified goods shall be undertaken and no removal of goods shall be effected by the manufacturer."

The appellant, engaged in the manufacture of Pan Masala and Pan Masala containing tobacco, filed an abatement claim under Rule 10 for ?1,56,11,871/- on the ground that they operated their machines for only 15 days in October 2009 but had deposited ?3,02,48,000/- towards duty liability for the entire month. The Adjudicating Authority rejected this claim, interpreting the word "goods" in the proviso to include inputs, thus disallowing any removal of goods, including inputs, during the closure period.

2. Whether the word "goods" in the second clause of the proviso includes inputs or refers only to "notified goods":

The appellant argued that the term "goods" in the second clause of the proviso should be read harmoniously with the term "notified goods" in the first clause. They contended that the word "goods" should refer only to "notified goods" and not include inputs. The appellant pointed out that an amendment to this proviso, introduced by Notification No. 8/2010 CE (NT) dated 27/02/2010, clarified this interpretation by explicitly stating "notified goods" in both clauses. This amendment was argued to be clarificatory in nature, intended to resolve existing confusion.

The appellant also cited the ruling by the Constitution Bench of the Hon'ble Supreme Court in Commissioner of Central Excise, New Delhi Versus Hari Chand Shri Gopal, emphasizing that exemption provisions must be construed strictly, and any ambiguity should favor the state. However, the appellant argued that the amendment to Rule 10 was clarificatory and thus should apply retrospectively.

The Tribunal, upon considering the rival contentions and examining the facts, agreed with the appellant's interpretation. It concluded that the word "goods" in the second part of the first proviso to Rule 10 refers only to "notified goods" and not inputs. The Tribunal noted that the term "inputs" is used exclusively and never interchangeably with "goods" in various provisions of the Central Excise Act and Rules. The subsequent amendment to Rule 10 further substantiated this interpretation, clarifying the legislature's intent.

Conclusion:

The Tribunal set aside the impugned order and allowed the appeal with consequential benefits. It directed the Adjudicating Authority to grant the refund along with interest as per the Rules within 45 days from the date of service or receipt of a copy of the order. The Tribunal's decision emphasized the importance of a harmonious and clarificatory interpretation of the proviso to Rule 10, aligning with the legislative intent and subsequent amendments.