C.C.E. & S.T. Delhi-I vs M/S. Tanishq Enterprises

[Arising out of Order-in-Original No. 217-CE-DLH-2013 dated 19.12.2013 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Delhi].

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

C.C.E. & S.T. Delhi-I .Appellants

Vs.

M/s. Tanishq Enterprises .Respondent

Appearance:

Shri D. Singh, DR for the Appellant

Shri Manish Pushkarna, Advocates for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 13.05.2015

FINAL ORDER NO. 51669/2015-EX(SM)

Per Ashok Jindal:

The Revenue is in appeal against the impugned order wherein the Ld. Commissioner (A) has held that payment on duty on pro-rata basis paid by the respondent is sufficient.

2. The facts of the case are that the respondent is a manufacturer of pan masala / gutkha and paying duty under Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008. During the period 01.05.2011 to 16.05.2011 the Pan Masala Packing Machines were sealed and were not in function. On 17.05.2011 the production started de-sealing of the machine on the said date. The respondent paid the duty for the period 17.05.2011 till 31.05.2011 on pro rata basis. Proceedings were initiated against the respondent on the premise that as per rule 10 of the Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008 the respondent is entitled for abetment of duty for the period of closure of the machine but the Adjudicating Authority confirmed the demand. But on appeal ld. Commissioner held that respondent is entitled to pay duty on prorate basis on 17.05.2011. Aggreived from the said order revenue is before me.

3. The ld. AR appearing on the behalf of the revenue drew my attention to the Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008 and section 3 A of the Central Excise Act 1994 and submits that as there was some pilferage of duties by these Pan Masala manufacturers. Therefore harsher rules have been made for collection of duty and as per the rules the assessee is required to pay duty for whole of the month in advance by 5th day of the month during the month machine is in operation. In this case respondent has not paid duty for whole of the month by 05.05.2011, therefore, they are not entitled to claim abetment on pro rata basis and required to pay duty for 17.05.2011 to 31.05.2011. In these circumstances, the ld. Commissioner (A) has misinterpreted the rule. Therefore, impugned order is required to be set aside. He further submits that there should be a harmonious reading of rule 7, 9 and 10 and therefore conclusion has to be drawn whether the assessee is required to pay duty in advance or can pay duty on pro-rata basis.

4. Heard the parties. Considered the submissions.

5. A similar case came up before this tribunal in the case of Godfrey Philips India Ltd. Final order no. 50937/2015-EX(SM) dated 17.03.2015 wherein the factory of the assesse was not in operation during the period 01.06.2010 and 21.06.2012 and it was operative only for three days i.e. on 27th 28th and 29th June 2012. But the assesse paid the duty for four days and the claim of the assessee was of abetment of excess duty paid for 30.06.2012. In that case this tribunal observed in para 7, 8 & 9 as under:

7. In this case the short issue emerges whether appellant is required to pay duty for whole of the period or required to pay duty on pro rata basis after availing the abatement for closure period and consequently is entitled to claim the abatement of excess duty paid or not. Similar issue came up before this Tribunal in the case of Kays Fragrance Pvt. Ltd. (Supra) wherein the issue was that whether appellant is required to pay only net amount of duty payable after adjusting the abatement or not. In that case this Tribunal held that the appellant is not required to first pay the duty for whole of the month and then claim the abatement and that he is required to pay only the duty for the days for which machines were operating and only interest can be asked for the delayed payment. I have further seen that in the case of Shree Flavours Pvt. Ltd. wherein the facts of the case are as under:

The Production started w.e.f. 08.09.2010 and closed on 17.09.2010. The appellant were required to discharge their duty liability within a period of five days from the date of production. But the appellant intimated to the department that they are going to close their factory from 17.09.2010 and they discharged their duty liability from the period 08.09.2010 to 16.09.2010 on 11.09.2012 itself.

8. Therefore, the issue emerges that whether the appellant was entitled for abatement for the period of 17.09.2010 to 30.09.2010 that factory was closed more than 15 days. In that set of facts this Tribunal has held as under:

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 result in denial of the substantive benefit available to him in terms of the rules, in question. As the appellant have already deposited the interest amount and is not contesting the same, we find no justification for confirmation of demand against him for the period of admitted closure of the factory. As such, we set aside the impugned order and allow the appeal itself, with consequential relief to the appellant.

9. I have gone through the impugned order as well as the case law relied upon by the Ld. Counsel. The denial of abatement is only on the ground that appellant is required to pay duty for whole of the month and thereafter to claim the abatement but that is not correct view in the light of the decision of this Tribunal in the case of Shree Flavours Pvt. Ltd. (Supra). Therefore, I hold that appellant is entitled for abatement of duty as claim.

6. In this case also the factory of the respondent was closed from 01.05.2011 to 16.05.2011. On 01.05.2011 the respondent was not sure whether their factory will be function from 17.05.2011 or not. Therefore, respondent was not required to pay duty on 05.05.2011 but when the respondents factory became operational on 17.05.2011. Within five days thereof the respondent has paid duty for the period 17.05.2011 to 31.05.2011. Therefore, I hold that respondent have correctly paid the duty on pro rata basis and do not find any infirmity with the impugned order. Same is upheld.

7. Appeal filed by the revenue is dismissed.

(Dictated and pronounced in the open court.)

(Ashok Jindal) Member (Judicial)

Bhanu

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E/53205/2014-EX(SM)