2018 (7) TMI 991 - AT - Central Excise

Refund of duties for remaining days in case of closure of factory - surrender of registration - obtaining a new registration after few days and carrying of same production as was carried earlier - whether a refund claim under Rule 17 of 2010 Rules is admissible to the appellant when they had although surrendered their registered certificate but after few days again obtained a new registration and started the same production from the same premises? - whether the Appellant has fulfilled the conditions of Rule 17 of 2010 Rules? Held that - The appellant although surrendered registration certificate on 29.05.2015 but on 01.06.2015. i.e. only after two days they have again applied for new registration certificate for the same work and with the same machines and in the same premises of factory. This clearly indicates their malafide intention to get the refund of duty which they were not able to claim otherwise in view of the provisions of Rule 10 of the said Rules 2010, wherein the continuous closure of 15 days or more was required for getting refund. As per Rule 17 a manufacture has to permanently ceases to work in respect of machine installed in the factory - Whereas in the present matter the appellant has intentionally surrendered his registration to take benefit of refund under Rule 17 as he intended to close his business for less than 15 days and in such situation abatement under Rule 10 was not allowed to them. Therefore they have intentionally surrendered their registration for taking the benefit of refund of duty under Rule 17 and again after 2 days only, have applied for new registration at the same premises, without making any changes and amendments and started the production with the same machines. The Appellant in not entitled for any refund - appeal dismissed - decided against appellant.

Summary

Issues:
1. Refund claim under Rule 17 of 2010 Rules
2. Admissibility of refund claim after surrendering registration
3. Interpretation of "permanently ceases to work" under Rule 17
4. Comparison with precedent case of Dhariwal Industries Ltd

Analysis:

Issue 1: Refund claim under Rule 17 of 2010 Rules
The appellant filed a refund claim under Rule 17 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 for the duty deposited in May 2015. The claim was based on surrendering registration and permanently ceasing work, entitling them to a refund on a pro-rata basis for the remaining days of the month.

Issue 2: Admissibility of refund claim after surrendering registration
The appellant surrendered their registration on 29.05.2015 and applied for a new registration on 01.06.2015 without making any changes. The question arose whether obtaining a new registration immediately after surrendering the previous one affected the admissibility of the refund claim under Rule 17.

Issue 3: Interpretation of "permanently ceases to work" under Rule 17
The key contention was the interpretation of "permanently ceases to work" under Rule 17. The appellant argued that the closure and surrender of registration indicated a permanent cessation of work, while the department contended that the reapplication for registration within two days indicated a lack of permanency in ceasing operations.

Issue 4: Comparison with precedent case of Dhariwal Industries Ltd
The Tribunal compared the present case with the precedent case of Dhariwal Industries Ltd, where the factory was forced to close due to a government notification. In contrast, the present appellant voluntarily surrendered registration and re-applied for registration within a short period, leading to a different interpretation of the permanency of ceasing operations.

In the final decision, the Tribunal held that the appellant's actions did not align with the requirements of Rule 17 for a permanent cessation of work. The Tribunal emphasized that the appellant surrendered registration with the intention to claim a refund but promptly reapplied for registration without any substantive changes, indicating a lack of genuine intent to permanently cease operations. As a result, the refund claim was rejected, and the appeal was dismissed.