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TMI Blog2025 (1) TMI 1370X X X X Extracts X X X X X X X X Extracts X X X X ..... n for manufacturing of Pan Masala and Pan Masala (Gutka) and the appellant have availed suo-moto abatement of duty for the days when the machines were sealed by the Department and not in operation. The show cause notice has demanded Central Excise duty of Pan Masala for the whole month even when the machines were remained non-operational. The show cause notice was issued demanding Central Excise duty of Rs. 1,46,01,076/- along with penalty provisions etc. The adjudicating authority vide order-in-original dated 25.09.2012 has partly dropped the demand of Rs. 70,45,161/- and confirmed the balance demand of duty amounting to Rs. 75,55,915/- under Section 11A of Central Excise Act, 1944. 3. Shri Ankur Upadhyay, learned Advocate appearing for the appellant has contended that Section 3A (2) (b) (ii) of the Central Excise Act, 1944 specifically mentions that calculation of the annual production capacity shall be determined on proportionate basis. It has further been submitted that the factors relevant to the production is altered or modified at any time during the year and duty has to be redetermined. The learned advocate has further argued that as per Rule 10 of Pan Masala Packing Machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argue that they were required to pay duty on pro-rata basis. This is not the case where the said assessee could have claimed abatement under Rule 10 of the said Rules, as the factory was not closed for a continuous period of 15 days, the four machines were working for the period from 01.04.2011 to 15.04.2011 and from 16.04.2011 another four machines were added, therefore, the show cause notice has rightly invoked Rule 8 as according to this rule the number of operative machines shall be taken is the maximum number of machines installed on any day during the month. As per Rule 9 the said assessee was required to pay differential duty amount arising due to addition of 4 new machines by 5th of the following month. Nevertheless, the duty required to be paid would be for the entire month. Accordingly, the duty demand of Rs. 25,00,000/- is sustainable. 12. Regarding the differential duty demanded for the month of May, 2011 the duty amount of Rs. 3,22,581/- has been demanded on 2 working days as the said assessee paid duty from 03.05.2011 whereas they were having 5 machines operative from 01.05.2011. I find that there is clear contravention of Rule 8 of the said Rules. They were requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise duty has been confirmed on the machines for the days for which they have remained non-operational. We also find that nowhere in the impugned order-in-original it has been mentioned by the adjudicating authority that appellant has not followed the laid-down procedure in the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Whenever the appellant wanted to stop working of a number of machines, due intimation has been given to the Department and the machines were sealed by the jurisdictional Superintendent of the range and whenever the machines were made operational, the appellant have informed the department and they have started operating the machine only after the officers have de-sealed the machines. Before proceeding further in the matter it will be relevant to have a glance of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 which is reproduced below:- "10. Abatement in case of non-production of goods. - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 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 en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the factory did not produce notified goods during any continuous period of fifteen days or more. The JDA/JAC has to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 provision for making an order of abatement under Rule 10 of the PMPM Rules. 13. As noticed earlier, Rule 10 of the PMPM Rules 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 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner 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 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." From the plain reading of the above Rule 10 it is clear that the abatement is available to the appellant on following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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