2018 (5) TMI 1299 - AT - Central Excise

Abatement - manufacture of Pan Masala - appellant obtained registration with effect from 27th May, 2013 and started production with effect from 28th May, 2013 for the first time. The factory remained operative from 28th May, 2013 to 31st May, 2013 (four days) - whether the appellant is entitled to abatement of duty for the period 1st June to 7th June, 2013 under the Pan Masala Packing Machine (Collection of Duty and Determination of Capacity) Rules, 2008 read with Section 3A of the Act? Held that - the facts herein are squarely covered by the ruling of the Division Bench of this Tribunal in Shree Pouches versus CCE, Jaipur-I 2017 (11) TMI 701 - CESTAT NEW DELHI , where it was held that as per the composite scheme, when there is no production due to sealing of the machine, the factory cannot be considered closed completely as one machine was continuously working. So Rule 10 is not applicable. The impugned order, so far it have rejected the refund of ₹ 14,93,334/- for the period 01/06/2013 to 07/06/2013, being the period of closure, is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Entitlement to abatement of duty under 'Pan Masala Packing Machine' Rules for a specific period.

Analysis:
The appeal revolved around the question of whether the appellant was entitled to abatement of duty for a particular period under the 'Pan Masala Packing Machine' Rules, 2008, in conjunction with Section 3A of the Act. The appellant sought abatement for the closure period from 1st June to 7th June, 2013, and the subsequent period of closure. The appellant had operated two machines initially but later continued production with only one machine. The Assistant Commissioner allowed abatement for a specific period, but the appellant contested the rejection of abatement for the initial closure period.

The appellant argued that Section 3A(2)(b) allows for the calculation of annual production on a proportionate basis when a factory is operational for only part of a year. Additionally, Section 3A(3) stipulates that duty on notified goods shall be levied and collected as prescribed. The appellant relied on a precedent involving Shree Pouches, where the Tribunal held that duty need not be paid for a machine sealed by the Department, as it cannot be considered operational during that period. The Tribunal ruled that the factory cannot be deemed completely closed if one machine is operational, and thus, Rule 10 does not apply. The appellant was directed to pay duty only for the period when the second machine was operational.

The Revenue, represented by the A.R., supported the impugned order. However, the Tribunal, after considering the arguments, found the case aligned with the Shree Pouches precedent. Consequently, the appeal was allowed, and the impugned order rejecting the refund for the closure period was set aside. The Adjudicating Authority was directed to process the refund within 60 days and recalculate the interest payable for late duty payment, refunding any excess interest deposited by the appellant.

In conclusion, the Tribunal's decision favored the appellant's claim for abatement of duty during the closure period, citing relevant legal provisions and a previous ruling to support the decision. The judgment emphasized the application of rules concerning duty payment and abatement in cases of partial factory operation, ultimately granting relief to the appellant.