TMI Blog2024 (3) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... this fire accident that occurred in their factory they were unable to produce the goods during this period and hence there was loss of production capacity. Rule 21 do not provide for such a situation. Admittedly appellant has was operating under the Compounded Levy Scheme as provided by the section 3A of the Central Excise Act, 1944 read with Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. It has been held by Hon ble Supreme court in the case of M/S HANS STEEL ROLLING MILL VERSUS COMMNR. OF CENTRAL EXCISE, CHANDIGARH [ 2011 (3) TMI 2 - SUPREME COURT] that the scheme of Compounded levy scheme is totally a different and self contained scheme. Importing the provisions of any other scheme of taxation would only lead to catastrophic results. Whether the interpretation placed by the Commissioner on second proviso to rule 8 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, tenable? - HELD THAT:- Rule 10 provides for the abatement of duty for the period of closure for whatsoever reason. In fact as per the submission of the appellant the unit was non operational for five days. Hence the benefit of abatement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s directed against Order-In-Original No. 01/Commissioner/Lko/ Remission/2014 dated 16.01.2014 of the Commissioner, Central Excise amp; Service Tax Commissionerate, Lucknow. By the impugned order following has been held: Order I disallow the remission of Central Excise Duty amounting Rs,2,07,09,677/- (Two crores seven lacs nine thousand six hundred and seventy seven ) as requested by the party vide letter dated 14.02.2011. 2.1 Appellant is engaged in manufacture and clearance of Pan Masala and Pan Masala containing tobacco or Gutkha falling under sub-heading no 24039990 of the first schedule to the Central Excise Tariff Act, 1985. They were discharging Central Excise duty on the basis of capacity of production under Section 3A of the Central Excise Act read with Pan Masala Packing Machines Capacity Determination and Collection of Duty) Rules, 2008. 2.2 During the month of January there were 88 (Eighty Eight) Pouch Packing Machines available in the unit in which 83 (Eighty Three) machines were installed and 05 (Five) machines were in sealed/uninstalled condition. Appellant filed Form F-1 on 27.12.2010 in terms of Rule 6(1) in which 83 machines were declared as installed and paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal fiction of deemed production/manufacture on which the scheme of compounded levy operates is only for the express purpose mandated by statute and no further. Reliance is placed on the decision o Shakuntala, [1961 SCC OnLine SC 105 = AIR 1966 SC 719] o Moon Mills Ltd., reported in (1966) 2 SCR 393 o Mancheri Puthusseri Ahmed [(1996) 6 SCC 185] o Vineeta Sharma_v. Rakesh Sharma, [(2020) 9 SCC 1]. In the present case, where undisputedly, the pouch packing machines, which, at the relevant time, was the only factor relevant for production in terms of Rule 4 of the Rules were sealed and uninstalled, the legal fiction with respect to deemed manufacture cannot operate. Thus, it is beyond any cavil that, the appellant cannot be deemed to have been manufacturing notified goods during the period between 14/01/2011 and 18/01/2011 (both days inclusive). Rules provide for proportionate calculation of duty, Rule 7 of the Rules provides that the duty payable for a particular month is to be calculated with respect to the number of operating packing machines in the factory during the month. Thus, the said Rule also clarifies that duty is payable only with respect to operating packing machines. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct whatsoever on the remission application filed by the appellant, inasmuch as, due to the appellant operating under the compounded levy scheme, the regular manner of assessment and collection of duty would have no application. The loss of goods in the context of Rule 21 of the Central Excise Rules, 2002 can only be interpreted to mean loss of production capacity and as the appellant had lost production capacity for five days in the month of January, 2011. Rule 10 of the Rules with respect to abatement are ex facie inapplicable in the facts of the instant case, the only option which remained was to prefer an application seeking remission under Rule 21 of the Central Excise Rules,2002. it is well settled by a large number of judicial pronouncements hat a litigant cannot be remedy less. Department cannot be unjustly enriched at the expense of an assessee as has been held in the following cases: Kanhaiya Lal Makund Lal Saraf, [1958 SCC OnLine SC 28 = AIR 1959 SC 135]. P. Rama Rao 1989 SCC OnLine Ori 341], Fire due to short circuit is nothing but an unavoidable accident in terms of rule 21 of the central excise rules. The report of the fire department dated 07/02/2011 nowhere mentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him by order In writing: Provided that where such duty does not exceed ten thousand rupees, the provisions of this rule shall have effect as if for the expression Commissioner the expression Superintendent of Central Excise has been substituted Provided further that where such duty exceeds ten thousand rupees but does not exceed one lakh rupees, the provisions of this rule shall have effect as if for the expression Commissioner , the expression Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be has been substituted Provided also that where such duty exceeds one lakh rupees but does not exceed five lakh rupees, the provisions of this rule shall have effect as if for the expression Commissioner , the expression Joint Commissioner of Central Excise or Additional Commissioner of Central Excise, as the case may be has been substituted. Bare reading of above, the term remission means waiver of Central Excise duty legally payable. According to Rule 21 of the Central Excise Rules , 2002 remission of duty can be granted in the following cases a) Goods have been lost or destroyed by natural causes. b) Goods have been lost or destroyed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction of the notified goods had not taken place for more than five (05) days is not acceptable as the pouch packing machines were sealed and unsealed by the department on 14.01.2011 at 20:00 hrs. and 19.01.2013 at 00:30 hrs. respectively on the request of the party which is total 04 (four) days. I have also gone through the Rule 8 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 which reads as under: Rule 8 Alteration in number of operating packing machines. In case of addition or installation or removal or uninstallation of a packing machine in the factory during the month, the number of operating packing machine for the month shall be taken as the maximum number of packing machines installed on any day during the month: Provided that in case a manufacturer commences manufacturing of goods of a new retail sale price during the month on an existing machine it shall be deemed to be an addition in the number of operating packing machine for the month: Provided further that in case of non-working of any installed packing machine during the month, for any reason whatsoever, the same shall be deemed to be operating packing machine for the mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing through the records it is clearly established that the appellants are availing the facilities under the Compound Levy Scheme, which they themselves, opted for and filed declarations furnishing details about annual capacity of production and duty payable on such capacity of production. It has to be taken into consideration that the compounded levy scheme for collection of duty based on annual capacity of production under Section 3 of the Act and Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 is a separate scheme from the normal scheme for collection of central excise duty on goods manufactured in the country. Under the same, Rule 96P of the Rules stipulate the method of payment and Rule 96P contains detailed provision regarding time and manner of payment and it also contains provisions relating to payment of interest and penalty in event of delay in payment or non-payment of dues. Thus, this is a comprehensive scheme in itself and general provisions in the Act and Rules are excluded. 13. The judgments of this court in the cases of Commissioner of C. EX Customs v. Venus Castings (P) Ltd as reported in 2000 (117) ELT 273 (SC) = 2002-TIOL-113-SC-CX and, Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll have to be declared that since Section 3A which provides for a separate scheme for availing facilities under a compound levy scheme does not itself provide for the levying of interest, Rules 96ZO, 96ZP and 96ZQ cannot do so and therefore, on this ground the appellant in Shree Bhagwati Steel Rolling Mills has to succeed. On this ground alone therefore, the impugned judgment is set aside. That none of the other provisions of the Central Excise Act can come to the aid of the Revenue in cases like these has been laid down by this Court in Hans Steel Rolling Mill v. CCE, (2011) 3 SCC 748 = 2011 (265) E.L.T. 321 (S.C.) as follows: 13 . 4.6 Hon ble Madras High Court has in case of Kalai Magal Alloy Steel Pvt. Ltd [2014 (303) ELT 44 (Mad)] (this decision has been affirmed by the Hon ble Supreme Court as reported at [2015 (321) ELT A52 (SC)] held as follows 8. The first issue to be considered, is as to whether Section 11A of the Act has any application to the case on hand, in the light of the fact that the assessee has availed the benefit of a specially compounded levy scheme as envisaged under Rule 96ZP of the Rules. Learned Counsel for the assessee would submit that the show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is not an omnibus provision, which stipulates limitation for every kind of action to be taken under the Act and Rules, and an example was cited with regard to the Modvat Scheme and was further held that even in that particular scheme, Section 11A of the Act had no application with regard to the time-limit in the administration of that scheme. The Hon ble Supreme Court further took note of the decision in the case of Commissioner of Central Excise Customs v. Venus Castings (P) Ltd. (supra) and held that it has squarely laid down the principle that compounded levy scheme is a separate scheme altogether and the assessee opting for the scheme, is bound by the terms of that particular scheme and Section 11A of the Act has no application for recovery under the different schemes. 4.7 Taking note of the above decisions, Hon ble Madras High Court has in case of Arun Smelters Ltd [2016-TIOL-2203-HC-Mad] held as follows: 39. Though Mr.K.Jayachandran, learned counsel for the appellant submitted that sub-Rule (3) of Rule 96ZO(II) of the Central Excise Rules, 1944, opens with a notwithstanding clause and therefore, arrears of duty, payable between 01.09.1997 to 31.03.2000, can be paid through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other way. It is also settled rule of interpretation and where a statute is penal in character, it must be strictly construed and followed. 41. .. 42. Now let us consider the decisions relied on by the learned counsel appearing for both the parties. The main thrust of the appellant is on the decision of the Punjab and Haryana High Court in Commissioner of Central Excise, Ludhiana v. Punjab Casting Pvt. Ltd., reported in 2014 (306) ELT 612 (P H), wherein, the respondent therein was engaged in the manufacture of non-alloy steel ingots. The assessee debited the Cenvat Credit Account of inputs for discharging their liability of payment of excise duty for the period under the Compounded Levy Scheme. The appellant therein contended that the respondent therein could not have made use of Cenvat Credit Account and the duty had to be paid only through Personal Ledger Account and finding fault with the procedure in payment of duty, the Adjudicating Authority i.e., the Joint Commissioner, Customs Central Excise confirmed the demand and also imposed interest. He disallowed the duty discharged through Cenvat account. Penalty of equal amount was also confirmed. When the correctness of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenable, as the law of the land is binding on us. 4.8 Appellant has argued that if they are not allowed to avail the benefit of Rule 21 of the Central Excise Rules, 2002, then they will be rendered remedy less. This could not be correct in view of the various judicial pronouncements. However we do not find any merits in the said argument. It is settled principle of interpretation of statute that court or tribunal should interpret the word as used in law without any addition or deletion from the same. A five judges bench of Hon ble Supreme Court has in the case of Dilip Kumar Co [2019 (361) ELT 577 (SC)] held as follows: 19. The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the Legislature. In Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guitas est, non debet admitti voluntatis quaestio . Following such maxim, the Courts sometimes have made strict interpretation subordinate to the plain meaning rule [Mangalore Chemicals case (Infra para 37).], though strict interpretation is used in the precise sense. To say that strict interpretation involves plain reading of the statute and to say that one has to utilize strict interpretation in the event of ambiguity is self-contradictory. 23. Next, we may consider the meaning and scope of strict interpretation , as evolved in Indian law and how the higher Courts have made a distinction while interpreting a taxation statute on one hand and tax exemption notification on the other. In Black s Law Dictionary (10th Edn.) strict interpretation is described as under : Strict interpretation. (16c) 1. An interpretation according to the narrowest, most literal meaning of the words without regard for context and other permissible meanings. 2. An interpretation according to what the interpreter narrowly believes to have been the specific intentions or understandings of the text s authors or ratifiers, and no more. - Also termed (in senses 1 2) strict construction, literal interpretation; l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pass strict - literalism into its fold. It may be relevant to note that simply juxtaposing strict interpretation with literal rule would result in ignoring an important aspect that is apparent legislative intent . We are alive to the fact that there may be overlapping in some cases between the aforesaid two rules. With certainty, we can observe that, strict interpretation does not encompass such literalism, which lead to absurdity and go against the legislative intent. As noted above, if literalism is at the far end of the spectrum, wherein it accepts no implications or inferences, then strict interpretation can be implied to accept some form of essential inferences which literal rule may not accept. 25. We are not suggesting that literal rule de hors the strict interpretation nor one should ignore to ascertain the interplay between strict interpretation and literal interpretation . We may reiterate at the cost of repetition that strict interpretation of a statute certainly involves literal or plain meaning test. The other tools of interpretation, namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language used. It was further observed : In all tax matters one has to interpret the taxation statute strictly. Simply because one class of legal entities is given a benefit which is specifically stated in the Act, does not mean that the benefit can be extended to legal entities not referred to in the Act as there is no equity in matters of taxation.... Yet again, it was observed : It may thus be taken as a maxim of tax law, which although not to be overstressed ought not to be forgotten that, the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax on him , [Russel v. Scott, (1948) 2 All ER 1]. The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible [Ormond Investment Co. v. Betts, (1928) AC 143]. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity [Mapp v. Oram, (1969) 3 All ER 215]. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed : it cannot imply anything which is not expressed : it cannot import provisions in the statute so as to supply any deficiency : (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of Legislature s failure to express itself clearly . Whether the interpretation placed by the Commissioner on second proviso to rule 8 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, tenable. 4.9 In terms of the rule of Pan Masala Packaging Machines (Capacity Determination and Collection of Duty) Rules, 2008, abatement is provided for the period during which the machines/ unit was not producing the goods. Section 3A (1) and (3) of the Central Excise Act, 1944 and Rule 10 of 2008 rules read as follows: 3A Power of Central Government to charge excise duty on the basis of capacity of production in respect of notified goods : (1) Notwithstandin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 of Central Excise. 4.10 In case of Thakkar Tobacco Products P. Ltd.[2016 (332) E.L.T. 785 (Guj.)], Hon ble Gujarat High Court ahs observed as follows: 6. Before adverting to the merits of the rival contentions, reference may be made to certain statutory provisions. Section 3A of the Act makes 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of duty on a proportionate basis for the period when the factory was not producing notified goods and accordingly adjusted duty to that extent from the duty payable in the month of April. The contention of the Revenue is that abatement amounts to refund and, therefore, the procedure for availing refund as laid down under Section 11B of the Act is required to be followed. In this regard, it may be noted that the expression abatement has not been defined anywhere in the Act or in the PMPM Rules. Therefore, 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, reduction or lessening of something. In the Dictionary of English Language, abatement has been defined as an amount abated, a deduction from the full amount of tax. On the other hand, refund has been defined as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment relying upon Rule 9 of the PMPM Rules, 2008 claiming that the monthly duty on notified goods is to be paid by 5th day of the month and the assessee cannot simpliciter claim set off without first depositing the same had been repelled by the Gujarat High Court in the case of Thakker Tobacco (supra) holding that Rule 10 of the PMPM Rules, 2008 envisages a situation and provides for abatement of excise duty calculated on proportionate basis, in case where factory does not produces notified goods during continuous period of 15 days or more. 23. Moreover, the statue, that is proviso to sub-section (2) of Section 3A itself provides for abatement where a factory producing notified goods did not produce the same during any continuous period of 15 days or more, the duty calculated on the proportionate basis shall be abated in respect of such period, if the manufacturer of such goods fulfills such condition as may be prescribed. In the present case as the assessee having complied the statutory requirement, is entitled to the benefit claimed by him. 24. The judgment in case of Thakker Tobacco (supra) having been accepted by the C.B.D.T. in its circular dated 16-2-2018, the controversy do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon ble Supreme Court in the case of Mafatlal Industries [1997 (89) ELT 247 (SC)]. By majority Hon ble Apex Court held as follows: WAS KANHAIYALAL CORRECTLY DECIDED AND IF NOT, IN WHAT RESPECTS ? 67. The first question that has to be answered herein is whether Kanhaiyalal has been rightly decided insofar as it says (1) that where the taxes are paid under a mistake of law, the person paying it is entitled to recover the same from the State on establishing a mistake and that this consequence flows from Section 72 of the Contract Act; (2) that it is open to an assessee to claim refund of tax paid by him under orders which have become final - or to reopen the orders which have become final in his own case - on the basis of discovery of a mistake of law based upon the decision of a court in the case of another assessee, regardless of the time-lapse involved and regardless of the fact that the relevant enactment does not provide for such refund or reopening; (3) whether equitable considerations have no place in situations where Section 72 of the Contract Act is applicable; and (4) whether the spending away of the taxes collected by the State is not a good defence to a claim for refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions in the Act, viz., Rule 11 and Section 11B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in Rule 11/Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the Act. No suit can be filed for refund of duty invoking Section 72 of the Contract Act. So far as the jurisdiction of the High Court under Article 226 - or for that matter, the jurisdiction of this court under Article 32 - is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment. 69. .. Section 72 contains a rule of equity and once it is a rule of equity, it necessarily follows that equitable considerations are relevant in applying the said r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the State, as suggested by the petitioners-appellants. The very idea of unjust enrichment is inappropriate in the case of the State, which is in position of parens patrea, as held in Charan Lal Sahu v. Union of India [1990 (1) S.C.C. 613 at 649]. And even if such a concept is tenable, even then, it should be noticed that the State is not being enriched at the expense of the petitioner-plaintiff but at someone else's expense who is not the petitioner-plaintiff. As rightly explained by Saikia, J. in Mahabir Kishore Ors. v. State of Madhya Pradesh [1989 (43) E.L.T. 205 (SC) = 1989 (3) S.C.R. 596], the principle of unjust enrichment requires - first that the defendant has been 'enriched' by the receipt of a 'benefit'; secondly, that this enrichment is 'at the expense of the plaintiff'; and thirdly, that the retention of the enrichment be just. This justifies restitution. We agree with the holding in Air Canada (quoting Professor George C. Palmer) that in such a case, it seems preferable to leave the enrichment with the tax authority instead of putting the judicial machinery in motion for the propose of shifting the same enrichment to the tax-payer . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t suffered any loss or prejudice (i.e., where he has passed on the burden to others) is no economic justice; it is the very negation of economic justice. By doing so, the State would be conferring an unearned and unjstifiable windfall upon the manufacturing community thereby contributing to concentration of wealth in a small class of persons which may not be consistent with the common good. The preamble and the aforesaid articles do demand that where a duty cannot be refunded to the real persons who have bore the burden, for one or the other reason, it is but appropriate that the said amounts are retained by the State for being used for public good (See Amar Nath Om Prakash). Indeed, even in an economically neutral Constitution, like that of United States of America, such a course has been adapted by the State and upheld by the Courts. It would be rather curious - nay, ridiculous - if such a course were held to be bad under our Constitution which speaks of economic and distributive justice, opposes concentration of wealth in a few hands and when the Forty-Second (Amendment) Act describes our Republic as a Socialist Republic. 76. It is true that some of the concepts now affirmed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked at from the constitutional angle, the right to refund of tax paid under an unconstitutional provision of law is not an absolute or an unconditional right. Similar is the position even if Article 265 can be invoked - we have held, it cannot be - for claiming refund of taxes collected by misinterpretation or misapplication of a provision of law, rules, notifications or regulation. 99. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment: (viii) The decision of this Court in Sales Tax Officer, Benaras v. Kanhaiyalal Mukundlal Saraf [1959 S.C.R. 1350] must be held to have been wrongly decided insofar as it lays down or is understood to have laid down propositions contrary to the propositions enunciated in (i) to (vii) above. It must equally be held that the subsequent decisions of this Court following and applying the said propositions in Kanhaiyalal have also been wrongly decided to the above ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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