2023 (8) TMI 610 - AT - Central Excise

Abatement by way of refund - case of the department is that the duty paid on pro- rata basis is not correct stating that duty for entire month to be deposited first and then go for refund amount of duty for closure period of machine - HELD THAT - Even though the Rule 9 prescribes that the duty under the scheme should be paid by 5th of the same month but at the same time Rule 10 provides abatement for the machine as not working minimum of 15 days - In the present case as regard the closure of machine for minimum 15 days and procedure for claiming the abatement has been undisputedly followed and is not objected by the department. Therefore the appellant in principle become entitled for abatement even if the appellant have not paid duty in advance by 5th of same month for the days when the machine was not working the duty was not payable in advance, the same shall stand adjusted against the duty not liable to be paid. Therefore this is a clear revenue neutral situation hence, in these circumstances, the demand cannot be raised particularly when the abatement procedure was followed by the appellant and machine was admittedly closed for minimum of 15 days in every month during August, 2011 to March, 2012 therefore, demand of duty is not sustainable. The very same issue has been considered by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S ANGADPAL INDL. PVT. LTD. 2015 (10) TMI 1844 - SUPREME COURT wherein the Apex Court has held that the respondent was not supposed to pay any duty, more so, when the entire exercise was revenue neutral. It legitimately claimed the rebate. The appellant are entitled for the abatement and consequently not required to pay any duty during the period machines were not working - the impugned order is set aside - Appeal allowed.

Summary

Issues Involved:
1. Whether the duty paid on a pro-rata basis by the appellant is correct.
2. Whether the appellant is entitled to abatement of duty for the period the machine was not operational.

Summary:

Issue 1: Duty Payment on Pro-Rata Basis
The department contended that the duty paid on a pro-rata basis by the appellant was incorrect. They argued that the duty for the entire month must be deposited first, and then a refund should be claimed for the closure period of the machine. A show cause notice was issued demanding the differential duty, which was confirmed by the Adjudicating Authority. The appellant appealed against this order.

Issue 2: Entitlement to Abatement of Duty
The appellant argued that there is a clear provision for abatement of duty if the machine is not operational for a minimum of 15 days in a month. They followed the procedure for sealing and desealing the machine, which was not disputed by the department. The appellant claimed that there was no prescribed procedure for refunding the abated duty, making the entire proceeding baseless.

The Tribunal found that Rule 9 requires duty to be paid by the 5th of the month, but Rule 10 provides for abatement if the machine is not operational for at least 15 days. Since the appellant followed the procedure and the machine was closed for the required period, they were entitled to abatement. The Tribunal cited several judgments and a CBEC Circular supporting the appellant's claim that duty need not be paid in advance if the machine was not operational, making it a revenue-neutral situation.

The Tribunal referred to the Supreme Court's decision in *Commr. Of C. Ex. Vs. Angadpal Indl. Pvt. Ltd* and other cases, which held that substantial benefits like abatement should not be denied on procedural grounds. The Tribunal concluded that the appellant was entitled to abatement and not required to pay duty for the non-operational period.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal with consequential relief, affirming that the appellant was entitled to abatement and not required to pay duty during the period the machine was not operational.