2023 (8) TMI 422 - AT - Central Excise

Compounded Levy Scheme - Claim of abatement in the form of refund - closure of factory or not - non-production of notified goods i.e. branded and unmanufactured without lime tube for the continues period for 17 days - whether for the purpose of availing abatement under Rule 10 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, the appellant statutorily need to stop manufacturing from both the machines which are installed in his factory? - CBEC Circular No. 980/04/2014-CE dated 24 Jan 2014. HELD THAT - The provisions of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 makes it very clear that the manufacturer of Chewing Tobacco and Unmanufactured Tobacco, as per the said Rules, 2010, require to pay compounded Central Excise duty for the period from which the machines are in operation in a particular month. Abatement of Central Excise duty is restricted to the situation where the provisions of the notified goods does not take place for the period 15 days or more - it is found that in this case, since the one of the machines of the manufacturer was not engaged in the manufacture of notified goods for more than 15 days and therefore, they are entitled for abatement of the duty which has been deposited by them in advance in the beginning of the month. CBEC Circular No. 980/04/2014-CE dated 24 Jan 2014 - HELD THAT - It is clear from the reading of the Circular that the assessee need to pay duty on deemed production in respect of per operating machine working in factory during the month taking other factors into consideration like retail sale price of the pouch etc. Therefore, since one machine of the appellant has not worked for 17 days in the month of May 2010, they are legally entitled for refund of the amount deposited by them in advance. The order-in-appeal is without any merit - appeal allowed.

Summary

Issues Involved:
1. Eligibility for abatement of duty under Rule 10 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010.
2. Requirement to seal all packing machines for claiming abatement.
3. Interpretation and application of relevant provisions and case laws.

Summary:

1. Eligibility for abatement of duty under Rule 10:
The appellant, engaged in the manufacture of branded unmanufactured tobacco, filed a claim for abatement in the form of a refund for the period from 15.05.2010 to 31.05.2010, during which one of their machines was sealed and not in operation. The jurisdictional Assistant Commissioner issued a show cause notice denying the refund on the grounds that both machines should have been sealed to qualify for abatement.

2. Requirement to seal all packing machines:
The Assistant Commissioner and the Commissioner (Appeals) held that the appellant did not fulfill the statutory conditions under Rule 10, as the factory was in operation with one machine running throughout May 2010. The appellant contended that only the non-operational machine needed to be sealed, and relied on several decisions supporting this interpretation.

3. Interpretation and application of relevant provisions and case laws:
The Tribunal examined Rule 10 and related provisions, concluding that abatement is allowed if a machine is non-operational for more than 15 days. The Tribunal referred to CBEC Circular No. 980/04/2014-CE, which clarified that duty is based on the number of operating machines and not on actual production. The Tribunal found that since one machine was not operational for 17 days, the appellant was entitled to a refund of the duty paid in advance.

Conclusion:
The Tribunal allowed the appeal, holding that the appellant met the conditions for abatement under Rule 10 and was entitled to a refund for the non-operational period of one machine. The order-in-appeal was found to be without merit.