2014 (4) TMI 417 - AT - Central Excise

Manufacture of chewing tobacco - compounded levy scheme - Closure of factory - Period of closure - Held that - the period of 15 days closure, need not fall within the same calendar month - the Rules required a manufacturing unit to deposit the entire duty for that particular month by 5th day of that particular month. If subsequently the unit is closed, they are given liberty to file abatement and seek refund of duty. However, in a scenario where a manufacturing unit is aware of the closure of its unit, before the duty is deposited by him for the entire month, he may seek abatement at that particular point of time, make deposit of duty for working days only. The non following of the said procedure, may result in confirmation of interest against the assessee, but will not result in denial of the substantive benefit available to him in terms of the rules, in question. As the appellant have already deposited the interest amount and is not contesting the same, we find no justification for confirmation of demand against him for the period of admitted closure of the factory. - Decided in favour of assessee.

Summary

Issues involved:
1. Duty liability under the Chewing Tobacco and Un-manufactured Tobacco Packing Machines Rules, 2010.
2. Abatement eligibility for closure period spanning two calendar months.
3. Requirement of duty deposit before claiming abatement.

Analysis:
1. The appellant, engaged in manufacturing chewing tobacco under the compounded levy scheme, closed their factory after a brief period of production. The issue revolved around the duty liability for the month, with the appellant discharging duty for the period of operation before closure.

2. The primary contention was the denial of abatement for the closure period spanning two calendar months. The Commissioner's decision to demand duty for the period from 17/09/10 to 30/09/10 was challenged. The Tribunal referenced past decisions to establish that a continuous closure of 15 days need not fall within the same calendar month, supporting the appellant's position.

3. Another aspect was the requirement of duty deposit before claiming abatement. The appellant argued that being a new unit, they were not obligated to deposit duty for the entire month before closure. The Tribunal agreed, stating that if a manufacturing unit is aware of imminent closure, they can seek abatement before depositing duty for the entire month, subject to payment of interest.

4. Ultimately, the Tribunal set aside the impugned order, allowing the appeal and providing consequential relief to the appellant. The decision highlighted that failure to follow deposit procedures might result in interest payment but should not lead to denial of substantive benefits under the rules. The appellant's compliance with interest payment was acknowledged, leading to the dismissal of the demand for the closure period.

5. The judgment concluded by disposing of the stay petition and appeal in the manner outlined, providing clarity on duty liabilities, abatement eligibility, and deposit requirements under the relevant rules.