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TMI Blog2024 (8) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the appellant submits that this issue is no longer res-integra as in the various judgments it was held that it is not necessary that the assessee should first pay the duty and thereafter, claim the abatement by way of filing refund claim during the period when the machine was inoperative and sealed. In those judgements, it was categorically held that in terms of Rule 10 of the Pan Masala Packaging Machines (Capacity Determination and Collection of Duty) Rules, 2008, the appellant can claim the abatement without first payment of duty. He placed reliance upon the following judgments:- 1. PM PRODUCTS reported at 2023 (384) E.L.T. 713 (Tri.-Ahmd.) 2. ΚΑΙΡΑΝ PANMASALA PVT LTD. reported at 2012 (285) E.L.T.296 (Tri.-Del.) 3. K FRAGRANCE PVT LTD. reported at 2014 (305) E.L.T.109 (P & H) 4. SHREE FLAVORS PVT LTD. reported at 2014 (304) E.L.T. 441 (Tri.- Del.) 5. SHREE FLAVORS PVT LTD. reported at 2015 (321) E.L.T. A-152 (P & H) 6. PANPARAG INDIA LTD. reported at 2016 (344) E.L.T. 497 (Tri.-Bang.) 7. SHAKTI FRAGRANCE PVT LTD. reported at 2015 (324) E.L.T.390 (Del.) 8. VARUN SILK MILLS PVT LTD. reported at 2007 (214) E.L.T.227 (Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "10. Abatement in case of non-production ofgoods. - In case a factory did not 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 seven 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 notified goods shall be undertaken and no removal of goods shall be effected by the manufacturer : 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 Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 period. A tax incentive is also stated to be a form of tax abatement. Thus, the ordinary meaning of abatement 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pass an abatement order in the case. The circular further says that representations have been received from field formations regarding whether the abatement orders need to be subjected to pre- and post-audit in the same manner as refund/rebate orders. Thus, the subject matter of the said circular is as to whether abatement orders need to be subjected to pre- and post-audit. The circular further says that 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. 11. Thus, the said circular proceeds on the footing that abatement orders are to be passed by the JDC/JAC and accordingly provides for application of circulars issued in the context of pre- and post-audit in relation to refund/rebate claims to abatement orders. However, the said circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 provision for making an order of abatement under Rule 10 of the PMPM Rules. 13. As noticed earlier, Rule 10 of the PMPMRules provides for abatement of duty calculated on proportionate basis in case where the factory does not produce notified goods during any continuous period of fifteen days or more. However, such abatement is subject to the conditions stipulated thereunder as referred to hereinabove. Once such conditions are satisfied, the assessee becomes entitled to abatement of duty to the extent of the days the factory did not produce the notified goods. 14. On a plain reading of Rule 10 of the PMPMRules, 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rise to any question of law, much less, a substantial question of law. The appeals, therefore, fail and are accordingly dismissed." In the case of CCE, Delhi-I v. Shakti Fragrances Pvt. Ltd. Unit-II - 2015 (324) E.L.T. 390 (Del.), the Hon'ble Delhi high Court also considered the similar issue and passed the following judgment : "11. In the present case, the appellant hadpressed into service Rule 10 of the PMPM Rules requires the duty calculated on a proportional basis to be abated in case the factory does not produce the notified goods during any continuous period of 15 days in a month. Rule 10 further requires the intimation to that effect to be given to the authorities at least three working days prior to the commencement of the period of closure. Rule 9 requires the monthly duty payable to the authorities to be paid by the fifth day of the same month. There is nothing in Rule 9 to suggest that the failure to pay the duty payable on all the machines upfront by the 5th day of a month would disentitle the assessee to claim pro rata abatement of duty. The requirement under Rule 10 of giving intimation three days prior to the closure has been complied with by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Thakker Tobacco (supra) and has issued circular holding that assessee is entitled to abatement of duty, in the event of closure of factory for continuous period of 15 days or more, without first depositing the duty in terms of Rule 10 of PMPM Rules, 2008, the appeal of the revenue has no force and is hereby dismissed. 26. The question of law is, therefore, answered in favour of the assessee and against the revenue." 5. In view of the above High Courts judgments and observation made by us herein above, the demand is not sustainable. Accordingly, the impugned order is set aside. Appeal is allowed." 4.2 Somewhat identical issue has been considered by the Hon'ble Punjab & Haryana High Court in the case of KAY FRAGRANCE P. LTD. (supra) wherein, the Hon'ble Court has passed following order:- "3. We have heard counsel for the revenue, perused the impugned order as well as the provisions of Rules 7, 9 and 10 of the Rules and have no hesitation in holding that order passed by the Tribunal does not suffer from any error of law, much less, in terms of the question of law, framed by the revenue, which reads as follows :- "Whether the Tribunal is justified in allowing the aba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 36 days, i.e., from 1-4-2011 to 5-4-2011 including from 1-4-2011 to 5-4-2011. Reference by counsel for the appellant to Rules 7 and 9 of the Rules in support of his contention, that as duty liability is determined for each month, abatement cannot be granted for a fraction of a month, in our considered opinion, is misplaced as no such intent is discernible from a reading of these rules. Rule 7 of the Rules merely provides that duty payable shall be calculated for a particular month and Rule 9 of the Rules merely prescribes that monthly duty payable on notified goods, shall be paid by the 5th day of the same month. We fail to comprehend as to how these rules can be pressed into service by the revenue in support of its view that abatement cannot be claimed for a fraction of a month. This apart, reference to a continuous period of 15 days or more under Rule 10 of the Rules relating to the right of an assessee, pertains to its obligation, to inform the Deputy Commissioner or the Assistant Commissioner of Central Excise, of closure of machines and, therefore, cannot be read in isolation to raise an inference that if closure in a month, is less than 15 days, a party shall not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same on account of abatement in duty. He submits that the entire exercise is a futile exercise and is Revenue neutral exercise, even though he agrees that the same invite some interest. He further clarifies that the Revenue, vide their letters dated 11-7-2011 and 14-7-2011 had directed them to pay the interest of around Rs. 1,09,000/- approximately, which they have already paid and are not disputing the same. 6. We agree with the learned advocate on the above issue. The deposits of dues are required to be done by a manufacturer by the 5th of a particular month. It is in this scenario that the Rules required a manufacturing unit to deposit the entire duty for that particular month by 5th day of that particular month. If subsequently the unit is closed, they are given liberty to file abatement and seek refund of duty. However, in a scenario where a manufacturing unit is aware of the closure of its unit, before the duty is deposited by him for the entire month, he may seek abatement at that particular point of time, make deposit of duty for working days only. The non following of the said procedure, may result in confirmation of interest against the assessee, but will not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of the Punjab & Haryana High Court dismissed the said appeal following its earlier decision dated 4th October, 2007 in Commissioner of Central Excise, Rohtak v. Kay Fragrance (P) Ltd. (CEA 52 of 2013) [2014 (305) E.L.T. 109 (P&H)]. 10. The Court has been shown the judgment of the High Court of Punjab & Haryana in Kay Fragrance (P) Ltd. The question addressed there was whether the duty liable was to be determined under the PMPM Rules for each month separately. The case of the Revenue was that the closure of a factory for less than 15 days in a month would not entitle the assessee to claim abatement of duty pro rata. The High Court held that Rules 7 and 9 could not be pressed into service by the Revenue to contend that the abatement cannot be made for a fraction of month. In other words, abatement of duty could not be denied to the party if in a particular month the closure was for less than 15 days. 11. In the present case, the appellant had pressed into service Rule 10 of the PMPM Rules requires the duty calculated on a proportional basis to be abated in case the factory does not produce the notified goods during any continuous period of 15 days in a month. Rule 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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