2018 (7) TMI 1367 - AT - Central Excise

Refund claim - closure of factory - sealing of machinery - rejection on the ground that the surrender of registration on 29/05/2015 and taking fresh registration w.e.f. 01/06/2015 cannot be considered as permanent discontinuation of the manufacture of goods and recommencement on 05/06/2015 by a new manufacturer - whether the appellant is entitled to refund of duty paid in advance for the month of June 2015 for the period 1st to 4th June 2015 when all the machines were sealed? Held that - The Tribunal in the case of M/S DHARIWAL INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX 2015 (9) TMI 514 - CESTAT AHMEDABAD considered similar closure of the factory and recommencement of production subsequently by obtaining fresh registration - The Rule 16 in the Pan Masala Rules corresponds to Rule 17 of the Chewing Tobacco Rules. The wordings are identical and these rules are to be considered as pari materia. The appellant will be entitled to the refund for the period 1st to 4th April in view of the fact that the Department had after surrender of registration on 29/05/2015 allowed registration w.e.f. 01/06/2015 without any objection or murmur. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim for duty paid during the period of temporary cessation of manufacturing activity.

Analysis:
The appellant, engaged in manufacturing chewing tobacco, filed an application to surrender registration and cease operations. All machines were sealed on 29/05/2015. Subsequently, a fresh registration was obtained, and manufacturing resumed on 05/06/2015. The appellant claimed a refund for duty paid for the period 1st to 4th June, 2015, when the machines were sealed. The dispute centered on whether the appellant was entitled to the refund due to the temporary cessation of manufacturing activity.

The appellant argued that the closure was formalized on 29/05/2015, and recommencement occurred on 05/06/2015 after obtaining a fresh registration. The advocate contended that duty should be paid on a pro-rata basis as per the Chewing Tobacco Rules. Citing a relevant case law, the appellant emphasized that similar situations had been decided in favor of the assessees.

On the other hand, the Department rejected the refund claim, alleging that the closure and recommencement were tactics to evade duty payment. The Department emphasized the term "permanently" and argued against the appellant's claim for refund. The Department distinguished the cited case law, asserting its inapplicability to the present scenario.

After hearing both parties, the Tribunal noted the undisputed facts of the case. The registration was surrendered on 29/05/2015, and fresh registration was obtained on 01/06/2015 without any change in the appellant's details. All machines remained sealed from 29/05/2015 to 04/06/2015. The Tribunal deliberated on whether the appellant deserved a refund for the period when the machines were sealed.

The Tribunal referred to a similar case involving Pan Masala where the Tribunal allowed a refund in comparable circumstances. Drawing parallels between the rules governing Pan Masala and Chewing Tobacco, the Tribunal concluded that the appellant was entitled to the refund for the period of temporary cessation of operations. The Tribunal held that the Department's acceptance of the fresh registration without objection supported the appellant's claim for a refund.

Consequently, the Tribunal allowed the appeal, granting the appellant the refund for the period of temporary closure. The judgment highlighted the importance of interpreting rules consistently and ensuring fairness in decision-making processes.