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2015 (8) TMI 25 - CESTAT AHMEDABAD

2015 (8) TMI 25 - CESTAT AHMEDABAD - TMI - Benefit of abatement of duty - non-production of goods during any continuous period of 15 days or more - manufacture of Jarda Scented Tobacco and Chewing Tobacco - Held that:- As regards the Board’s circular dt.12.03.2009 stating that the abatements are subject to pre/post-audit, we do not necessarily see any fatally irreconcilable contradiction between the Board’s circulars dt.15.09.1999 & 30.08.1997 on the one hand and the one dt.12.03.2009 on the oth .....

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le 6(2) of the said Rules 2010, while availing abatement under Rule 10. It is already observed that the expression in Rule 10 are clear that the manufacturer shall calculate the duty by reducing amount on a proportionate basis in respect of non-production of goods.

Decision of the Tribunal in the case of Thakkar Tobacco Products Pvt.Ltd (2015 (2) TMI 606 - CESTAT AHMEDABAD) followed. It is noticed that the same view was taken by the Tribunal in the case of Trimurti Fragrances Pvt. Lt .....

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ondent: Shri A.K. Raha, Special Counsel, Dr. J. Nagori, Authorised Representative Per: P.K. Das A common issue is involved in these appeals and therefore, all are taken up together for disposal. 2. The relevant facts of the case, in brief, are that the Appellants were engaged in the manufacture of Jarda Scented Tobacco and Chewing Tobacco, classifiable under Sub Heading No.2403.9930 and 2403.9910 respectively of the First Schedule to the Central Excise Tariff Act, 1985. In exercise of powers con .....

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more, in terms of Rule 10 of the said Rules 2010. According to the Revenue, the abatement in Rule 10 is not automatic or suo motu and it is in the nature of refund and the Appellants are required to pay the duty as determined under Rule 9 of the said Rules 2010 by 5th day of the same month. Thereafter, Department would allow the abatement after following the administrative procedure of pre and post audit. By the impugned orders, the Adjudicating authorities confirmed the demand of duty alongwith .....

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pro-rata basis in respect of specified periods where the factory did not produce the goods and followed the procedures as prescribed in Rules. In the present appeals, the factory did not produce the notified goods during any continuous period of 15 days or more and rightly availed abatement. It is submitted that the issue is covered by the decision of the Tribunal of this Bench in the case of Thakkkar Tobacco Pvt. Ltd & Others Vs CCE Ahmedabad-II - 2015-TIOL-690-CESTAT-AHM. It is further su .....

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e fairly submits that the issue may be covered by the earlier decisions of the Tribunal, but, in those cases, the Bench had not considered the correct legal position. The submissions of the learned Special Counsel, are, precisely, as under:- i) It is not a case of self-assessment. As per Rule 6(2) of the said Rules 2010, Annual Capacity of Production is determined by the Deputy Commissioner/ Assistant Commissioner of Central Excise and pass order, which would be treated as an Assessment order fo .....

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India) Pvt. Ltd - 2000 (120) ELT 285 (SC). The Larger Bench of the Tribunal in the case of Commissioner of Customs (Imp.), Nhava Sheva Vs Eurotex Indus. & Exports Ltd - 2007 (216) ELT 137 (Tri-LB) held that refund claim is not maintainable unless the Assessment order in pursuance of which duty paid, is challenged. ii) The expression shall be abated , in Rule 10 would show that it is mandate to the Department to determine the abatement of duty. The Assessee has no right to take benefit of aba .....

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e Appellant cannot be permitted to avail suo motu abatement. He referred to Para 5 of the decision of Hon ble Supreme Court in the case of Commissioner of Central Excise, Chandigarh Vs Doaba Steel Rolling Mills - 2011 (269) ELT 298 (SC) in the context of object of Section 3A(1) of the Act, 1944. 5. After hearing both the sides and on perusal of the records, we find that the Central Government framed the Rules 2010 in exercise of the powers conferred by sub-sections (2) and (3) of Section 3A of t .....

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file application for seeking abatement, subject to the procedure of grant of refund as per provision of Section 11B of the Act, 1944 as held by the Adjudicating authority. 6. The learned Special Counsel fairly submitted that even the issue is covered in favour of the Appellants in the case of Thakkar Tobacco Products Pvt.Ltd. & Others (supra), but, the Bench has not considered certain legal provisions in proper manner and the impugned orders are liable to be upheld. For the purpose of proper .....

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ed. In other words, it is not in dispute that the requirements stipulated in Rule 10 of the said Rules were fulfilled. It is also not disputed that the adjustments made were not more than the amounts of duties mandated to be abated as per the said Rule 10. 6. We find that the said Rule 10 does not make any stipulation about the abatement having to be claimed by filing an application therefor although it does not imply anything to be contrary either. We find the Rule 9 of the said Rules in one of .....

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case of Sri Padma Balaji Steels (P) Ltd Vs CCE Coimbatore - 2009 (246) ELT 255 (Tri-Chennai), the Tribunal held as under:- The claim of the assessees for abatement on the ground that the factory was closed for 9 days and 10 days respectively during the period 18-5-98 to 27-5-98 and 17-6-98 to 27-6-98 has been rejected by the Commissioner on the ground that since closure was for a period of less than one month, the assessee ought to have paid duty liability and then sought abatement, in terms of .....

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tement. In the absence of any such condition in Rule 96ZO, which is relevant rule in the present case, the benefit of abatement should have been extended. The Commissioner has read into a rule something does not exist thereunder. We, therefore, set aside the impugned order and allow the appeal. 7. We find that the Board vide Circular No.331/47/97-CX, dt.30.08.1997, in Para 4(e) observed as under:- Rule 96ZO has been amended to allow abatement of duty, under?(e) sub-Section (3) of Section 3A of t .....

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ch a closure is for a reasonably long period, periodic verification about the continued closure should be done by the jurisdictional Assistant Commissioner of Central Excise. Our attention was also drawn to CBEC Circular No.485/51/, d.15.09.1999, which was issued in relation to Rule 96ZQ as it existed prior to 28.02.1999. 2. The Board has examined the matter. Under rule 96ZQ as it existed prior to 28-2-1999, the prerequisites for grant of abatement on closure of stenter were the stenter should h .....

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did not arise. In that case, the stenter should have been sealed in the aforesaid manner for the purpose of claiming abatement. It would be proper, therefore, that where independent processor is eligible for abatement, it should be granted to him whether he has paid the duty first or did not pay the duty in anticipation of obtaining the order of abatement. Though rule 96ZQ did not contain any specific provision in this regard, there was no specific provision to deny it either. 3. Accordingly, t .....

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the above circular dt.28.02.1999. The Adjudicating authority has refused to follow the ratio of the said circular on the ground that the said circular was issued only for the period 16.12.1998 to 27.02.1999. While the Commissioner is technically right in his observation, it needs to be pointed out that the period (upto 27.02.1999) was mentioned in the said circular only because the said Rule was amended w.e.f. 28.02.1999. In the case of Steel Industries of Hindustan Industrial Area Vs CCE Ghazia .....

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2000 to 15-8-2000. Stenter with 4 chambers remained closed and appellants were eligible for abatement. The question whether they should have paid ₹ 7 lakhs and taken refund thereafter is basically a question of procedure. I do not think that the substantial benefit should be denied on this ground. It needs to be pointed out that the CESTAT held this view inspite of the fact that the Rule 96ZQ (7)(e) specifically required the payment of duty for the entire period of the month as is evident .....

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edabad - 2003 (161) ELT 740 (Tri-Del), in effect held as under:- It is clarified in the circular that where independent processor was eligible for abatement, it should be granted to him whether he has paid the duty first or did not pay the duty in anticipation of the order of abatement. Though Rule 96ZQ did not contain any specific provision in this regard, there was no specific provision to deny it either . The Board, therefore, decided that the Commissioner should decide first whether the proc .....

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foods Pvt. Ltd. (supra), the issue there was abatement of duty on some machines which were in sealed condition during the month and the Tribunal held that the abatement under said Rule 10 cannot be given in respect of individual machines. Thus, this judgment is not relevant to the present appeals. The reference was also made by ld.D.R. to the case of K.P. Pan Products Pvt.Ltd (supra) but the issue there was whether the continuous period of 15 days of closure of the factory should necessarily fal .....

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s much as when the adjustment of abatement has been made, nothing prevents Revenue froma auditing the correctness thereof. More importantly, the Board s circulars have no statutory force and have to be ignored to the extent they are in conflict with the judicial pronouncements. 9. It is quite evident from the foregoing that apart from the Board s circulars dt.30.08.1997 and 15.09.1999 referred to earlier, in a series of judicial pronouncements, a consistent approach has been taken to the effect .....

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that the Deputy Commissioner or the Assistant Commissioner of Central Excise, shall after making such enquiry, approve the declaration and pass an order concerning annual capacity of production of the factory. Rule 7 of the Rules 2010, provides that the duty payable for a particular month shall be calculated by application of the proper rate of duty specified in the notification of the Government of India, in the Ministry of Finance, No.16/2010-CE, dt.27.02.2010 to the number of packing machine .....

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oods of a new retail sale price during the month, the monthly duty payable shall be recalculated on the pro rata basis of the total number of days and in case the amount of duty so recalculated is less than the duty paid for the month, the balance shall be refunded to the manufacturer by the 20th day of the following month. 8. To sum up, the manufacturers shall file declaration of the production capacity with details of packing machines to the Deputy/Assistant Commissioner of Central Excise, who .....

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he duty will be recalculated, and, if the duty is paid more than the amount so recalculated, the balance shall be refunded to the manufacturer by the 20th day of the following month. 9. In the above legal position of Rule 2010, it is seen that the proviso to Section 3A(3) of the Act, 1944 extended benefit to abate the duty calculated on a proportionate basis for non-production of goods during any continuous period of 15 days or more. The relevant portion of the said proviso to Section 3A(3) is r .....

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ot produce the notified goods during any continuous period of fifteen days or more, the duty calculated on a proportionate basis shall be abated in respect of such period provided the manufacturer of such goods files an intimation to this effect with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, at least three working days prior to the commencement of said period, who on receipt .....

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ready produced before the commencement of said period may be removed within first two days of the said period: Provided further that when the manufacturer intends to restart his production of notified goods, he shall inform to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, of the date from which he would restart production, whereupon the seal fixed on packing machines would be opened under the physical supervision of Superintendent .....

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atement to the manufacturer and they cannot avail suo motu. On close reading of the provision of Rule 10 of the Rules 2010 read with proviso to Section 3A(3) of the Act, 1944, we are unable to accept the submission of the learned Special Counsel. The words the duty calculated on a proportionate basis shall be abated , in Rule 10, if read with prefix words in case a factory did not produce the notified goods during any continuous period of fifteen days or more would make it clear that the duty ca .....

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of Central Excise, as the case may be . The learned Counsels for the Appellants categorically stated that they have filed an intimation as required under the Rule and declared the availment of the abatement of duty in their monthly returns ER-1 from time to time. It is further contended that the Show Cause Notices were issued on the basis of scrutiny of the ER-1 returns. On a query from the Bench, the learned Advocates submit that the availment of abatement was not disputed till date as the App .....

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High Court in the case of Steel Industries of Hindustan Industrial Area (supra) held that the abatement of the closure period, depositing of duty was not a pre-condition for claiming it under Rule 96ZQ of the erstwhile Central Excise Rules, 1944, which was discussed by the Tribunal in the case of Thakkar Tobacco Products Pvt.Ltd. & Others (supra). 13. The learned Special Counsel further submits that it is not the case of self-assessment procedure. In other words, in terms of Rule 6(2), the D .....

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es 2002, the Assessee shall himself assess the duty payable on any excisable goods except in the case on Cigarettes. In the case of Dhariwal Industries Ltd [2013 (289) ELT 227 (G.O.I.), Govt. of India observed that Pan Masala Packing (Capacity Determination and Collection of Duty) Rules 2008, (similar to Rules 2010 herein), provides self-assessment procedure/self-sealing. The Hon ble Madras High Court in the case of Kalai Magal Alloys Steel Pvt.Ltd. Vs CESTAT 2014 (303) ELT 44 (Mad.), while deal .....

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ule 173G(1) of the Central Excise Rules, 1944, and the duty liability is to be complied as detailed in Clauses I and II under Rule 96ZP of the Rules. 13.1 The learned Special Counsel strongly relied upon the decision of Hon ble Supreme Court in the case of Priya Blue Industries (supra) and Flock (India) Pvt. Ltd (supra). In the case of Flock (India) Pvt. Ltd (supra), the Hon ble Supreme Court observed that the earlier adjudication order, determining classification of goods was not challenged des .....

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has been reviewed under Section 28 of Customs Act, 1962 and so modified in an appeal. In the present case, we find that the claim of abatement under Rule 10 has no relation to determination of Annual Capacity of Production under Rule 6(2) of the said Rules 2010 and therefore, there is no question of challenging of order issued under Rule 6(2) of the said Rules 2010, while availing abatement under Rule 10. It is already observed that the expression in Rule 10 are clear that the manufacturer shal .....

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