TMI Blog2023 (9) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... k . It is difficult to accept the contention of the learned Authorised Representative for the Revenue, as after the change of constitution new company came into existence and respondent firm (Partnership firm) has been treated as permanently ceases to works. There is no provision in Rules 2008 that after declaring permanently ceases to work , the manufacturer would not be entitled to reopen his factory with new name. Rule16 would cover the situation, where a manufacturer filed an intimation to the Deputy/ Assistant Commissioner of Central Excise intimating permanently ceases to work for surrender of registration. There is no bar on reopening of the factory with new registration in Rules, 2008, which is a subsequent event. In the undisputed facts of this case one important aspect needs to be kept in mind that the revenue gravely erred in contending that the factory was not permanently ceased to work as the changed Pvt. Ltd. Company restarted the production. On this, we are very clear in our mind that there is clear distinction in the ownership of partnership firm and a Private Limited Company. Therefore even if a partnership firm ceased their operation and in place of the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Range Superintendent at midnight of 24.06.2011. The respondent, thereafter filed refund claim amounting to Rs. 2,25,00,000/- online before Jurisdictional Assistant Commissioner for the amount of duty paid in respect of 25 pouch packing machines, which were closed and sealed during the period from 25.06.2001 to 30.06.2011 i.e. for 6 days. The refund sanctioning authority vide Order-In-Original dated 06.09.2011 sanctioned the refund claim to the respondent under Rule 16 of Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 read with Section 11B of the Central Excise Act 1944. Being aggrieved with the refund order, revenue filed the appeal before the Commissioner (Appeals), who vide impugned order upheld the order of lower authority and rejected the appeal filed by the department. Hence, the Revenue before this Tribunal. 2. Shri Rajesh Nathan, Learned Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the grounds of appeal and submits that Rule 16 ibid is clear that the same would apply in a case where manufacturer permanently ceases to work in respect of all the machines installed in the factory and who has filed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Chapter 21 and 24 respectively. They have changed the constitution of said firm and has converted into Private Limited company with effect from 21.06.2011. They have been issued certificate of incorporation under the name and style of Vishnu Pouch Packing Pvt. Ltd. and have been issued Corporate Identity Number. Further they also informed the department that they have applied for PAN No. and on receipts of the same, they will apply for New Central Excise Registration. It is clear that during the disputed period M/s Vishnu Packing (Unit No. 2) cease to be is existence. Further for new company they have filed an online application for central excise registration on 30.06.2011. It is on record that all the machines were in sealed condition during the disputed period. 4.2 We find that Respondent with effect from midnight of 24.06.2011 with effect from 25.06.2011 they were compelled to stop their manufacturing activities and there is no dispute that all the machines were sealed in the midnight of 24-06-2011 by the department and hence there could not be manufacture of any gutkha from 25-06-2011 onwards. Rule16 of the Pan Masala Packing Machines Rules provides that when a manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehensive meaning to cover the situation, other than Rule 10 of non-production of goods for temporary period. To sum up, Rule 10 extended abatement in case of non-production of goods for certain period. But, Rule16 would apply in case, a manufacturer closed down his factory in respect of all the machines installed in the factory. 4.5 Further, the other aspect is that the use of words operating packing machine in Rules 5, 6(3), 7 and 8 would indicate that the duty for a particular month shall be payable on the basis of number of packing machines operating in the factory. Second Proviso to Rule 8 stipulates that in case of non-working of any installed packing machine, for any reason whatsoever, the same shall be deemed to be operating packing machine for the month. The benefit under Rule 10 would be extended in case non-working of all operating packing machines for certain period. But, in case a manufacturer cease to work permanently and all the machines were sealed by the Superintendent of Central Excise on the basis of intimation given by them, resulting to none of the packing machines would be operating and the duty if any paid, should be refunded. 4.6 The Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Government is to prevent evasion of excise duty in respect of certain excisable goods with a view to safeguard the interest of revenue. This, does not mean that Section 3A confer power on the Government to frame the rules to charge excise duty for the period prior to the commencement of production. Therefore, in our view the impugned order confirming demand for First three days of May 2009 when the production had not even commenced cannot be sustained. In our aforesaid view, we find strength from the judgment of Punjab Haryana High Court in the matter of Godwin Steels (P) Ltd.wherein while dealing with the similar issue of Compounded levy scheme in relation to steel mfg. unit it was held thus :- 3. After hearing the learned counsel for the parties, we are of the considered opinion that as the petitioner s factory started production with effect from 17-11-1997, therefore, it was wholly unjust for the department to recover the duty for the whole month of November, during which, its factory had not commenced production. When the factory of the petitioner was not in production, then obvious, it is not liable to pay the duly during the period of non-production . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as new by the different legal enitity and considering the same as not permanently ceases, would be totally unjust, improper and against all cannons of natural justice and fair play. So, in such peculiar facts and circumstances of the case, we hold that the respondent is entitled to refund of the duty for closing down of their factory for the disputed period. 4.8 In the undisputed facts of this case one important aspect needs to be kept in mind that the revenue gravely erred in contending that the factory was not permanently ceased to work as the changed Pvt. Ltd. Company restarted the production. On this, we are very clear in our mind that there is clear distinction in the ownership of partnership firm and a Private Limited Company. Therefore even if a partnership firm ceased their operation and in place of the same a Private Limited Company started operation, both being separate legal entities, it cannot be said that the partnership firm has not ceased it s production permanently. It s very obvious that when one entity closed it s production and surrendered the registration and a new entity obtained a fresh registration with a new PAN, the former entity became non-existent and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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