Shri Siddeshwar Tobacco Prod Pvt. Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 308/RPR-I/2013 dated 10.09.2013 passed by Commissioner of Central Excise (Appeals) Raipur]

For approval and signature:

Honble Mr 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?

Shri Siddeshwar Tobacco Prod Pvt. Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

Raipur (CG)

Appearance:

Shri Manish Saharan, Advocate for the Appellants

Shri Devender Singh, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 24.02.2015

ORDER NO. FO/ A 50599 /2015-Ex(SM)

Per Ashok Jindal :

The facts leading to filing of this appeal are, in brief, as under.

1.1 The appellants are manufacturer of pan masala containing tobacco called gutkha and they were discharging duty liability in terms of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. They had declared six operating machines and on this basis their monthly duty liability was Rs. 1,14,00,000/- which is paid in advance. In respect of July 2010, they had paid the duty of Rs. 1,14,00,000/- in advance. However, by the order dated 25/07/12 of the Government of Chhattisgarh, the manufacture and sale of gutkha was banned with immediate effect. The appellant on 26/07/12 intimated the Jurisdictional Assistant Commissioner with a copy to Jurisdictional Superintendent, Central Excise intimating him that the State Government has banned the manufacture and sale of gutkha in the State from 27/07/12, that in the present scenario they are compelled to stop the manufacturing activities and, therefore, they want to permanently discontinue the manufacturing of gutkha from 27/07/2012. Accordingly on 27/07/12, in presence of Panchas the machines were sealed by the jurisdictional Central Excise officers. The appellant surrendered their registration certificates on 30th July, 2012. Since the machines had been sealed in the evening of 27th July, 2012 and, as such, they could not manufacture gutkha from 27/07/12, the appellant filed a refund claim for an amount of Rs. 14,70,768/- in respect of the duty for the period from 28/07/12 to 31/07/12, as they had already paid the duty for the entire month of July, 2012 in advance. The refund claim was sanctioned by the Jurisdictional Assistant Commissioner vide order-in-original dated 25/10/12. The refund claim was sanctioned on the basis of Rule 9 and 16 of the Pan Masala Packing Machines Rules. In this regard Rule 16 of the Pan Masala Packing Machines Rules provides that

Notwithstanding anything contained in these rules, where a manufacturer permanently ceases to work in respect of all the machines installed in the factory and who has filed an intimation for surrender of registration with the Deputy Commissioner/Assistant Commissioner of the Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, for this purpose, the duty payable by him for the month shall be calculated pro-rata on the basis of the total number of days in the said month and total number of days before the date of receipt of the said intimation with the Deputy Commissioner /Assistant Commissioner of Central Excise, as the case may be, and the duty paid for the month in accordance with the notification shall be adjusted towards the duty so calculated and on such adjustment, if there is any excess payment, it shall be refunded to the manufacturer by 20th day of the following month and deficiency, if any, shall be payable by him by the 5th of the following month.

1.2 The Commissioner reviewed the above order of the Assistant Commissioner and directed him to file an appeal before the Commissioner (Appeals). The Commissioner (Appeals) vide order-in-appeal dated 10/09/13 allowed the Revenues appeal and reversed the Assistant Commissioners order on the ground that he finds that the appellant had intimated vide their letter dated 26/07/12 for stopping of the production in the general practice, as they have already done as common practice for intimation of sealing of pouch packing machines and de-sealing for pouch packing machines many times and that the said intimation later does not reveal regarding permanent closure of production of the notified goods of the existing retail price. It is on this basis that the Commissioner (Appeals) held that sanction of the refund under the provisions of Rule 9 readwith Rule 16 of the Pan Masala Packing Machines Rules is not admissible. Against this order of the Commissioner (Appeals), this appeal has been filed

2. Heard both the sides.

3. Shri Manish Saharan, Advocate, the learned Counsel for the appellant, pleaded that the refund claim has been sanctioned under Rule 9 and 16 of Pan Masala Packing Machines Rules, that as is clear from the appellants letter dated 26/07/12 that the appellant had stopped the production permanently on account of ban on manufacture and sale of gutkha and pan masala imposed by the State Government of Chhattisgarh, that the fact of permanent closure of the machines had been clearly intimated by the appellant in their letter dated 26/07/12, that the machines had been sealed by the Central Excise officers in presence of Panchas in the evening of 27/07/12, that in view of this, the appellant are eligible for refund of duty for the period from 28/07/12 to 31/07/12, and that the ground on which the refund has been held as inadmissible is totally incorrect, as the letter dated 26/07/12 submitted by the assessee clearly mentions that they had intimate the Central Excise authorities about permanent closure of the factory because of ban on manufacture and sale of gutkha and pan masala. He, therefore, pleaded that the impugned order is not correct.

4. Shri Devender Singh, the learned DR, opposed the arguments advanced by the learned Counsel by reiterating the findings of the Commissioner (Appeals) in the impugned order and pleaded that since the appellant had surrendered the license on 30th July, 2012, the refund has been correctly denied.

5. I have considered the submissions from both the sides and perused the records.

6. On going through the letter dated 26/07/12 of the appellant addressed to the Assistant Commissioner with a copy endorsed to the Range Superintendent, it is seen that the appellant clearly informed the Assistant Commissioner that in view of the ban on manufacture and sale of gutkha and pan masala imposed by the State Government with effect from 27/07/12 they are compelled to stop their manufacturing activities and for this reason they wish to permanently discontinue the manufacture of gutkha from 27/07/12. There is no dispute that all the machines were sealed in the evening of 27/07/12 in the presence of Panchas and hence there could not be manufacture of any gutkha from 28/07/12 onwards. Rule 16 of the Pan Masala Packing Machines Rules provides that when a manufacturer permanently ceases to work in respect of all the machines installed in the factory and who has filed an intimation for surrender of registration with the Deputy Commissioner/ Assistant Commissioner of the Central Excise, as the case may be, with a copy to the Superintendent of Central Excise for this purpose, the duty payable by him for the month shall be calculated pro-rata on the basis of the total number of days in the said month and total number of days before the date of receipt of the said intimation with the Deputy Commissioner/ Assistant Commissioner of Central Excise, and the duty paid for the month in accordance with the notification shall be adjusted towards the duty so calculated and on such adjustment, if there is any excess payment, it shall be refunded to the manufacturer by 20th day of the following month and deficiency, if any, shall be payable by him by the 5th of the following month. Accordingly, the Assistant Commissioner has refunded the disputed amount strictly in accordance with Rule 16 of the Pan Masala Packing Machines Rules, I therefore find that this rule is applicable in the circumstances of this case. The ground on which the Commissioner (Appeals) has reversed the Assistant Commissioners order sanctioning the refund is factually incorrect as from the Appellants letter to the Assistant Commissioner it is absolutely clear that the appellant wanted to stop the manufacture of gutkha permanently in view of ban on its manufacture and sale.

7. I find that the Assistant Commissioner has refunded the disputed amount strictly under Rule 16 of the Pan Masala Packing Machines Rules. The appellants was required to be intimated to surrender all their registration for permanent closure of their machines which the appellant has complied with. Therefore, I hold that learned Assistant Commissioner has correctly sanctioned the refund claim under Rule 16 of the Pan Masala Packing Machines Rules of an amount of Rs.14,70,768/- .

8. Further, I find that during the course of hearing, learned AR on behalf of the Revenue also argued that the appellant has paid duty for the month of July, 2012 with a delay and for that they are required to pay interest. Infact the question of payment of interest was not the subject matter in this case as the appellant has filed a refund claim for the period of permanent closure of their manufacturing and the adjudicating authority sanctioned the refund claim. If at all, there was demand of interest, for that department could have proceeded separately which the department has failed to do so. Therefore, the impugned order is set aside in the facts of the case and appeal filed by the appellant is allowed with consequential relief.

(operative part of the order pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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