2019 (9) TMI 174 - AT - Central Excise

Abatement of duty - closure of the factory - Compounded Levy Scheme - manufacture of Kamyab brand Pan Masala and Kamyab brand Zarda factory sealed for 20 days - denial of abatement on the ground that the appellant did not clear the earlier manufactured goods within a period of two days - HELD THAT - In the absence of any dispute that during the period of abatement, the assessee s factory admittedly remained closed thus earning the abatement in terms of the said Rules and mere clearance of the earlier manufactured goods beyond the period of two days, by itself cannot be adopted for denial of the abatement. The condition of clearance of pre-manufactured goods within a period of two days of the closure of the factory is meant for avoiding any misuse of the facility given to the manufacturers as the goods in question are prone to evasion - However, when it is otherwise established and is not disputed by the Revenue that the substantive condition of the Notification which is the sealing of the machines and consequent closure of the factory stand satisfied, the clearance within two days being only a technical condition, has to be interpreted in a manner leading to justice to the assessee. Denial of abatement is not justified - appeal allowed - decided in favor of appellant.

Summary

Issues: Request for Adjournment; Denial of abatement of duty based on failure to clear earlier manufactured goods within two days

In this judgment by the Appellate Tribunal CESTAT ALLAHABAD, the issue at hand was the denial of abatement of duty to an appellant engaged in the manufacture of Pan Masala and Zarda under the Compounded Levy Scheme. The appellant's machines were sealed for a period, and they applied for abatement of duty. The Revenue contended that although the machines remained sealed and no manufacturing took place during that period, the appellant failed to clear earlier manufactured goods within two days of sealing, leading to the denial of abatement. The lower authorities upheld this denial based on strict interpretation of exemption Notifications. However, the Tribunal found that the substantive condition of sealing the machines and factory closure was met, and the clearance within two days was a technical condition. The Tribunal emphasized interpreting the conditions in a justifiable manner to ensure justice to the assessee, especially when the purpose of the condition was not defeated. Therefore, the Tribunal set aside the impugned orders and allowed the appeal, granting abatement to the appellant.

This judgment highlights the importance of interpreting statutory conditions in a manner that upholds justice and the purpose behind the legislation. It clarifies that technical conditions should not override substantive compliance when the purpose of the law is not compromised. The decision serves as a reminder to authorities to consider the practical implications and intent behind legal provisions while adjudicating matters related to tax abatements and exemptions.