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2015 (11) TMI 319 - GUJARAT HIGH COURT

2015 (11) TMI 319 - GUJARAT HIGH COURT - 2016 (332) E.L.T. 785 (Guj.) - Contravention of the provisions of rule 7, rule 9 and rule 10 of the PMPM Rules - Assessee not paid appropriate central excise duty by due date and had wrongly taken abatement of duty and adjustment of the same towards payment of duty - Compounded levy scheme - Held that:- Assessee did not produce the notified goods during a continuous period of fifteen days in the month of March and accordingly claimed that it was entitled .....

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e PMPM Rules.

Adjustments made were not more than the amounts of duties mandated to be abated as per rule 10 of the PMPM Rules, the action of the respondent assessee in computing the proportionate amount of duty towards the abatement and setting it off against the duty payable in the next month does not adversely affect the revenue in any manner. The abatement, in the opinion of this court, is not akin to refund and means reduction or diminution of the duty. Therefore, when the duty .....

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by an order of the Commissioner or any authority, but nonetheless provide for abatement of duty and the extent of entitlement to such abatement, no fault can be found in the approach of the assessee in suo motu taking the benefit of such abatement. - it cannot be said that the view adopted by the Tribunal is not a plausible view warranting interference by this court. In the absence of any infirmity in the impugned order passed by the Tribunal, it is not possible to state that the same gives rise .....

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the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad (hereinafter referred to as "the Tribunal") in Appeal No.E/12449, 12450, 14001-14003, 14022-14024/2013 by proposing the following questions stated to be substantial questions of law:- A. Whether a manufacturer has the option to suo motu abate the duty in respect of closure of factory for a continuous period of 15 days or more without first depositing the duty? B. Whether the Tribunal committed error .....

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st Schedule to the Central Excise Tariff Act, 1985 which is brought under the Compounded Levy Scheme with effect from 1st July, 2008 as per the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (hereinafter referred to as "the PMPM Rules") notified vide Notification dated 1st July, 2008. 3. The respondent assessee vide letter dated 24th February, 2011 intimated the Assistant Commissioner, Central Excise, Division IV, Ahmedabad-II that they had run .....

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period of sixteen days whereas the machines were sealed for fifteen days in the month of March. It was noticed that the assessee, as per the machines run by it in the month of April, 2011, was liable to pay duty of ₹ 395 lakhs, however, for the month of April, 2011, the assessee had made payment of ₹ 2,79,83,873/- with a remark that payment was made in March, 2011 in Form No.2 for April, 2011. The Department was accordingly of the view that the assessee had short-paid duty for the m .....

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making them eligible for claiming abatement and in the absence of any such order, the assessee was not eligible for adjustment of the abatement of duty of March, 2011 for the duty liability for the month of April, 2011. Accordingly, show-cause notice was issued to the respondent assessee alleging contravention of the provisions of rule 7, rule 9 and rule 10 of the PMPM Rules on the ground that they had not paid appropriate central excise duty by due date and had wrongly taken abatement of duty a .....

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er with interest. The assessee carried the matter in appeal before the Tribunal. By the impugned order dated 6th February, 2015, the Tribunal has allowed the appeal and set aside the orders-in-original. 4. Mr. Y.N. Ravani, learned senior standing counsel for the appellant invited the attention of the court to the provisions of rule 10 of the PMPM Rules to submit that while rule 10 provides for abatement in case of non-production of notified goods for the period stipulated therein, the assessee c .....

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. It was pointed out that sub-section (3) of section 3A of the Act provides for abatement and that since no provision has been made in the PMPM Rules laying down the procedure for grant of abatement, the procedure as per the circular has to be followed. It was submitted that the interpretation given by the Department vide the circular dated 12th March, 2009 should be given due weightage as it gives the correct interpretation of law and should not be brushed aside lightly. It was submitted that t .....

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us and provides for making payment of duty on the 5th day of the month failing which liability starts and interest also has to be paid and that the legislature has not provided for less payment of duty in the next month. It was, accordingly, urged that rule 10 of the PMPM Rules does not absolve the assessee from payment of duty on the 5th of the month as provided by rule 9 and that there is no provision in the PMPM Rules for payment of proportionate amount of duty. According to the learned couns .....

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legislature that the entire duty should be paid. It was submitted that since abatement is akin to refund, section 11B of the Act would be applicable. Referring to the impugned order, it was submitted that the Tribunal has placed reliance upon decisions rendered in the context of rule 96ZQ of the Central Excise Rules, 1944 which have no relevance to the interpretation of rule 10 of the PMPM Rules, inasmuch as, rule 96ZQ cannot be compared to the present rules. 4.2 Referring to the findings recor .....

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oposed or as may be deemed fit by this court. 5. Vehemently opposing the appeals, Mr. Paresh Dave, learned counsel for the respondent assessee submitted that the submissions advanced by the learned counsel for the appellant based on the circular dated 12th March, 2009 are without any basis. It was contended that the circular nowhere provides that there has to be an order of abatement nor does it provides for any procedure to be followed by the manufacturer. The circular only provides for pre and .....

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, 96ZQ and 96ZP of the Central Excise Rules, 1944 specifically made provision for an order of abatement to be made, the PMPM Rules are totally silent in that regard, which shows that the legislature has consciously omitted to make any such provision. It was submitted that the circular, therefore, does not supplement any omission in the rules. Referring to the proviso to section 3A(3) of the Act, it was submitted that the same is applicable to all compounded levy schemes. Referring to the 6th pro .....

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e 10 shows that it does not lay down any condition to apply for abatement. According to the learned counsel insofar as the implementation of the circular dated 12th March, 2009 is concerned, the authorities can verify Form-2 submitted by the assessee which contains all the details of the duty paid, including the abatement availed of for the purpose of pre or post audit. It was, accordingly, submitted that both the propositions put forth on behalf of the revenue namely, that the Board s circular .....

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provision for "Power of Central Government to charge excise duty on the basis of capacity of production in respect of notified goods". Sub- section (3) thereof provides that the duty of excise on notified goods shall be levied, at such rate, on the unit of production or, as the case may be, on such factor relevant to the production, as the Central Government may, by notification in the Official Gazette, specify, and collected in such manner as may be prescribed. The proviso thereto pro .....

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ctory producing notified goods does not produce notified goods for a continuous period of fifteen days or more. Therefore, the proviso limits the collection of duty to the extent specified therein. 7. In exercise of powers conferred by sub-sections (2) and (3) of section 3A of the Act, the Central Government has framed rules called the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Rule 7 of the PMPM Rules provides for calculation of duty payable and lay .....

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der the PMPM Rules, the assessee is required to calculate the duty payable each month in terms of the notification of the Government and pay the duty payable for each month on the 5th day of that month. However, when the factory does not produce notified goods for a continuous period of fifteen days or more, rule 10 of the PMPM Rules provides for abatement of duty for the period during which the factory was not producing such notified goods. 8. The controversy involved in the present case center .....

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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 of such intimation shall direct for sealing of all the packing machines available in the factory for the said period under the physical supervision of Superintendent of Central Excise, in the manner that these cannot be operated during the said period : Provided that during such period, no manufacturing activity, whatsoever, in respect of no .....

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ld restart production, whereupon the seal fixed on packing machines would be opened under the physical supervision of Superintendent of Central Excise. 9. The facts of the case are required to be examined in the light of the above statutory provisions. From the facts noted hereinabove, it is apparent that the assessee did not produce the notified goods during a continuous period of fifteen days in the month of March and accordingly claimed that it was entitled to abatement of duty on a proportio .....

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the popular or dictionary meaning of the said expression is required to be looked into. In Black s Law Dictionary, the term "abatement" has been defined as a reduction, a decrease, or a diminution; the suspension or cessation, in whole or in part, of a continuing charge, such as rent. In the context of tax, abatement has been stated to be diminution or decrease in the amount of tax imposed. In the New Oxford Dictionary of English, "abatement" has been defined as the ending, r .....

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is reduction, diminution and, therefore, when an assessee is entitled to abatement of duty, he is entitled to reduction of duty to that extent and not refund thereof as is sought to be contended on behalf of the revenue. It would have been a different matter if the rules prescribed for the manner in which abatement has to be granted. However, in the absence of any rule in this regard or any specific provision providing for the mode of availing abatement, the course of action adopted by the resp .....

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oods is required to file an intimation to that 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 such period, who on receipt of such information, is required to direct sealing of all the packing machines available in the factory for the said period under the physical supervision of Superintendent of Central Excise, i .....

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ghtly overturned, it may be apposite to examine the nature of the said circular. A perusal of the circular dated 12th March, 2009 shows that the subject of such circular is "Pre and post audit of abatement orders in terms of rule 10 of the Pan Masala Packing Machine Rules, 2008 - clarification regarding". A perusal of the contents of the said circular shows that the same says that in terms of rule 10 of the PMPM Rules, the abatement of duty is to be given in case the factory did not pr .....

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circulars have been issued in the context of procedure to sanction pre/post audit of refund/rebate claims and as the abatement order is in the nature of refund, they are required to be subjected to the same administrative procedure of pre and post audit as laid down by the Board from time to time regarding refund. Accordingly, it has been provided that all Board circulars issued in the context of pre and post audit of refund/rebate claims will apply mutatis mutandis to the abatement orders also. .....

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t speak of any order of abatement being passed by the JDC/JAC. In the opinion of this court, in the absence of the Act or the rules framed thereunder making any such provision, no such provision can be read into the Act and the rules. 12. In the above backdrop, the merits of the impugned order may be examined. The Tribunal, in the impugned order, has recorded that in none of the orders impugned before it, it is in dispute that there was a closure of the factory for more than fifteen days and the .....

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n application, though it also does not imply to the contrary. Referring to rule 9 of the PMPM Rules, it was observed that when the intention of the Government is that the amount is to be refunded and an express provision is provided therefor, whereas rule 10 does not make any such provision. It may be noted that insofar as rule 96ZO of the Central Excise Rules is concerned, sub-rule (2) thereof expressly provides for claim of abatement being made under sub-section (3) of section 3A of the Act, w .....

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nt as may be specified in such order subject to the fulfillment of the conditions laid down thereunder. Thus, in relation to independent processors of textile fabrics, manufacturers of non-alloy steel hot re-rolled products and manufacturers of non-alloy steel ingots, who were also assessed on the basis of annual production capacity under section 3A of the Act, there was an express provision for making an order of abatement whereas the PMPM Rules are totally silent in that regard. There is no pr .....

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tent of the days the factory did not produce the notified goods. 14. On a plain reading of rule 10 of the PMPM Rules, it is apparent that while the same provides that duty calculated on a proportionate basis shall be abated, it does not provide for any procedure for doing so. Thus, whereas rules 96ZQ, 96ZO and 96ZP of the Central Excise Rules, 1944, which also are schemes under the compounded levy scheme, there were express provisions for making an order of abatement by the Commissioner, rule 10 .....

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