2018 (5) TMI 1199 - AT - Central Excise

Refund u/r 10 of the CTD Rules - manufacture of branded chewing tobacco - interpretation of statute - case of appellant is that Revenue has mis-interpreted the 4th Proviso to Rule 9 inasmuch as the word permanently was interpreted to hold that either the manufacturing activity is discontinued or the product will never be manufactured in future - Held that - it cannot be said that the appellant is not entitled for the refund/abatement under 4th Proviso to Rule 9 of the CTD Rules. In context with the expression new retail sale price , this Tribunal in the case of SA Freshners Pvt. Ltd. 2018 (3) TMI 18 - CESTAT NEW DELHI , has held that the benefit of the fourth proviso to Rule 9 is applicable, in cases, where the production of goods of a new RSP, which has not been earlier manufactured during the month, is commenced by the manufacturer, even if the goods bearing such RSP were being manufactured in the earlier months - benefit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Interpretation of 4th Proviso to Rule 9 of the CTD Rules for duty refund.

Detailed Analysis:
1. Facts and Background: The appellant, engaged in manufacturing branded chewing tobacco, operated under the Chewing Tobacco and Unmanufactured Tobacco (Determination of Capacity and Collection of Duty) Rules, 2010. The appellant deposited an amount as duty liability but was asked by the department to pay the entire duty in advance, leading to a refund claim application.

2. Interpretation of 4th Proviso to Rule 9: The main contention revolved around the interpretation of the 4th Proviso to Rule 9 of the CTD Rules. The appellant argued that the word "permanently" in the rule should not be understood as discontinuation of manufacturing forever, but rather as ceasing production during a specific month. Reference was made to a previous Tribunal decision supporting this interpretation.

3. Revenue's Position: The Revenue, however, supported the findings of the impugned order disallowing a portion of the refund claim based on their understanding of the rule.

4. Judicial Analysis: The Tribunal analyzed the 4th Proviso to Rule 9, which addresses duty calculation when an existing retail sale price (RSP) is permanently discontinued during a month or when production of goods with a new RSP commences in a month. The Tribunal disagreed with the interpretation that "permanently" meant discontinuation forever, emphasizing that the rule applies to actions within a specific month only. The Tribunal highlighted that the rule does not imply permanent cessation of manufacturing, but rather actions within a given month. Notably, the Tribunal referenced a previous case to support the interpretation that the rule applies when goods with a new RSP, not produced earlier, are manufactured in a month.

5. Decision: After thorough analysis, the Tribunal found no merit in the impugned order's denial of the refund benefit to the appellant. Consequently, the Tribunal allowed the appeal in favor of the appellant by setting aside the denial of the refund amount.

This detailed analysis of the judgment showcases the key issues, arguments presented by both parties, the legal interpretation of the rule in question, and the final decision rendered by the Tribunal in favor of the appellant.