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2019 (1) TMI 901 - AT - Central ExciseAbatement of duty - manufacture of Chewing Tobacco - sealing of machinery/machinery not functioning for part of the month - duty to be paid for full month or part thereof - Rule 10 of the CTD Rules - entitlement for suo moto abatement for the period - Held that - The ruling in the case of Shiv Shakti Agrifood Pvt. Ltd. 2018 (4) TMI 764 - CESTAT NEW DELHI is per incuriam as the said ruling has been passed without taking notice of the provisions of the Rule 9 Fourth Proviso and also the earlier precedent judgments of this Tribunal and it was held that Other than Rule 10, there is no provision for charging duty on pro-rata basis in respect of machines which, for the reason of being sealed, were operating only during part of the month. In a subsequent order under similar facts and circumstances with the same assessee Single Member Bench of this Tribunal in M/S ARORA TOBACCO PVT. LTD. VERSUS CCE, JAIPUR-I 2018 (5) TMI 1199 - CESTAT NEW DELHI , has followed the earlier ruling of SA Freshner Pvt. Ltd. 2018 (3) TMI 18 - CESTAT NEW DELHI and have held accordingly in favour of this appellant assessee by holding that it cannot be said that the appellant is not entitled for the refund/abatement under 4th Proviso to Rule 9 of the CTD Rules. Suo-moto entitlement of abatement - Held that - Hon ble Gujrat High Court in the case of Thakkar Tobacco products Pvt. Ltd. 2015 (2) TMI 606 - CESTAT AHMEDABAD held in favour of the assessee and the said ruling has been accepted by the Revenue as is evident from Circular No. 1036/2/2018 dated 16th February 2018. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether duty is payable on a pro-rata basis for the number of days the machine operated or for the whole month without abatement for the period the machine was sealed or out of operation. 2. Whether the appellant is entitled to take suo moto abatement for the period when the machines were not operating or sealed for part of the month. Issue-wise Detailed Analysis: 1. Pro-rata Duty Payment vs. Full Month Duty Payment: The appellant, engaged in the manufacture of Chewing Tobacco, was operating under the Chewing Tobacco & Unmanufactured Tobacco Packing Machines (Capacity Determination & Collection of Duty) Rules, 2010 (CTD Rules). The appellant paid duty on a pro-rata basis for the days the machines were operational, claiming abatement for periods when the machines were sealed or not in operation. The central question was whether duty should be paid for the entire month or only for the days the machines were operational. The Show Cause Notice (SCN) issued to the appellant proposed a demand of excise duty amounting to ?2,77,25,177/- along with interest and penalty, arguing that duty should be payable for the maximum number of machines operated during the month as per Rule 7 and 8 of the CTD Rules. The SCN alleged that the appellant's practice of paying duty only for the days the machines were operational was against the legal provisions. The appellant contended that the similar issue had been decided in their favor by the Hon'ble CESTAT, New Delhi, for the subsequent period (October 2012), where the benefit of the 4th proviso to Rule 9 was allowed. The appellant argued that the benefit of Rule 10 and 9 had been correctly claimed during the relevant period, and the impugned order denying the same was liable to be set aside. 2. Suo Moto Abatement: For February 2012, the appellant claimed suo moto abatement under Rule 10 of the CTD Rules, as the factory was closed for more than 15 days. The appellant argued that they had complied with all conditions laid down under proviso to Section 3A(3) of the Excise Act read with Rule 10 of the CTD Rules. The appellant contended that neither Rule 10 nor any other provision of the CTD Rules required the filing of a separate abatement claim, and that suo moto claiming of abatement was legal and proper in the absence of any express provision prescribing the procedure or restricting the same. The appellant cited several judicial precedents where suo moto abatement claims under Rule 10 were held to be legally correct, including the cases of Trimurti Fragrances Pvt. Ltd., Zest Packers Pvt. Ltd., Maa Vindhyavashini Tobacco Pvt. Ltd., and the Circular No. 331/47/97-CX. Tribunal's Findings: The Tribunal found that the appellant was entitled to the benefit of Rule 10 and 9 of the CTD Rules. The Tribunal referred to the decision in the appellant's own case for October 2012, where the benefit under the 4th proviso to Rule 9 was allowed. The Tribunal also cited the case of Thakkar Tobacco Products Pvt. Ltd., where the Gujarat High Court held in favor of the assessee, and the decision was accepted by the Revenue. The Tribunal concluded that the ruling in Shiv Shakti Agrifoods Pvt. Ltd. was per incuriam as it did not consider Rule 9 Fourth Proviso and earlier precedent judgments. The Tribunal held that the appellant was correct in paying duty on a proportionate basis in terms of the 4th proviso to Rule 9 and that the suo moto abatement claim under Rule 10 was legally sustainable. Conclusion: The appeal was allowed, and the impugned order was set aside with consequential relief. The Tribunal held both issues in favor of the appellant and against the Revenue, affirming that duty should be calculated on a pro-rata basis for the days the machines were operational and that the appellant was entitled to suo moto abatement for the period the machines were not operating or sealed.
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