9911796707
TMI Blog2024 (3) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... harging 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 central excise duty amounting Rs. 12,84,00,000/-(Twelve crore eighty four lacs) vide GAR-7 dated 04.01.2011 in terms of Rule 7, accordingly the party filed Form F-2 on 10.01.2011 in terms of Rule 9. 2.3 A fire accident broke out on the top floor of the unit in the evening of 13.01.2011. After the accident, the unit remained closed till 18.01.2011. They party informed the department regarding closure of the unit due to fire accident vide their letter dated 14.01.2011 along with Form-l. 2.4 As per the direction of jurisdictional Assistant Commissioner, all the 83 (Eighty Three) installed Pouch Packing Machines were sealed/ uninstalled on 14.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Duty was paid by the appellant in advance on 04/01/2011 for the month of January, 2011 in accordance with Rule 9 of the Rules. The fourth, fifth and the last provisos to Rule 9 clearly provide for calculation of pro rata duty on the basis of the total number of days in that month. Abatement of duty as provided for in rule 10 not applicable to the present case and rule 21 of the Central Excise Rules, 2002 is attracted in the present case, and loss of goods is nothing but loss of production capacity Rules are not a self-contained island which does not admit of the application of the parent statute or other subordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the fire broke out due to gross negligence on the part of the appellant, as has been incorrectly observed by the Ld. Commissioner. On the other hand, it is specifically observed in the said report that the fire possibly broke out due to short circuit in the line going from the generator. Such fire accidents due to short circuit have been considered as unavoidable accident giving rise to claim for remission. M. Kumar Udhyog (P) [2014 (306) ELT 19 (All.)] Raltronics India Pvt. Ltd. [2017 (354) ELT 324 (All.)] Hindustan Zinc reported in 2009 (233) ELT 61 (Raj.) Lord Chloro Alkali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e" 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 by unavoidable accident. c) Goods are claimed by the manufacturer as unfit for consumption or for marketing. at any time before removal, subject to such conditions as may be imposed by the proper officer by order in writing Thus according to Rule 21, the remission can be claimed only where, the goods have been lost or destroyed, by natural causes, or by the unavoidable accident. Now, it is beyond dispute that an accidental fire broke out on 13.01.2011 in the factory premises of the party and the fire brigade was called which do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 month. The aforesaid proviso of Rule 8 clearly states 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 month. Hence, in light of this proviso, al the 83 installed machines during the closure period were operative machines". 4.3 We are concerned with the following issues: Whether the claim made by appellant for remission of duty as per Rule 21 of Central Excise Rules, 2002 maintainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 of India v. Supreme Steels and General Mills as reported in 2001 (133) ELT 513 (SC), has clearly laid down the principle that the, compound levy scheme is a separate scheme altogether and an assessee opting for the scheme is bound by the terms of that particular scheme. It is settled matter now that Section 11A of the Act has no application for recovery under different schemes. 14. In the case of Collector of Central Excise, Jaipur V. Raghuvar (India) Ltd as reported in 2000 (118) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 notices have been issued under Section 11A of the Act. A reading of the show cause notices issued, would make it clear that the demand has been made under Rule 96ZP of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944. Similarly, the penalty has also been demanded under Rule 96ZP(3) of the Rules. Therefore, it would be factually incorrect to contend that the notices issued to the assessee, were under Section 11A of the Act. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 cenvat credit, earned after 31.03.2000 and that payment through personal ledger account, is not specifically provided for, in sub-rule (3) of rule 96ZO(II) of the Central Excise Rules, if the manufacturer desires to pay a sum of Rs.5,00,000/- per month, in two equal installments, the first installment latest by the 15th day of each month, and the second installment latest by the last day of each month, and the amounts so paid shall be deemed to be fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 same was tested by the respondent therein, the appellate authority confirmed the decision, excluding the levy of interest, and imposition of penalty. In the second appeal, decisions stated supra, were reversed. Thus, being aggrieved, the Commissioner of Central Excise, Luthiana, went on appeal to Punjab and Haryana High Court. Though the Department contended that when strict compliance of rules was to be made by the respondents therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. 20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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; literal construction; restricted interpretation; interpretatio stricta; interpretatio restricta; interpretatio verbalis. 3. The philosophy underlying strict interpretation of statutes. - Also termed as close interpretation; interpretatio restrictive. See strict constructionism under constructionism. Cf. large interpretation; liberal interpretation (2). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 in taxation statutes. Indeed, it is well-settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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]. It has also been said that if taxing provision is "so wanting in clarity that no meaning is reasonably clear, the Courts will be unable to regard it as of any effect [IRC v. Ross and Coutler, (1948) 1 All ER 616]." Further elaborating on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bit 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) Notwithstanding anything contained in section 3, where the Central Government, having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise 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 provides that where a factory producing notified goods does not produce the notified goods during any continuous period of fifteen days or more, the duty calculated on a proportio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to pay back "money" to give or to put back. Tax abatement is ordinarily known as reduction of or exemption from tax by a Government for a specific peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 does not remain any longer as the matter is not res integra any more. 4.12 In view of the above decisions it is quite evident that in case n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows: 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 refund of taxes collected contrary to law. 68. Re.: (I): ..... To such a situation, Proposition No. 3 enunciated in Kamala Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rule - an aspect which we shall deal with a little later. Thus, whether the right to refund of taxes paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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". The Canadian Supreme Court has further emphasised - and, in our opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 us, e.g., effect of passing on and the relevance of our Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 extent. This declaration - or the la ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
