Custom, Excise & Service Tax Tribunal
M/S Thakkar Tobacco Products Pvt.Ltd vs Cce Ahmedabad-Ii on 6 February, 2015
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.E/12449,12450,14001-14003,14022-14024/2013 [Arising out of OIO No.23-24/Commr/AKG/Ahd-II/2013, dt.26.04.13, OIO No.AHM-EXCUS-002-Commr-027-13-14, dt.26.09.13, OIO No.AHM-EXCUS-002-Commr-026-13-14, dt.26.09.13, OIO No.AHM-EXCUS-002-Commr-028-13-14, dt.26.09.13, OIO No.AHM-EXCUS-002-Commr-032-13-14, dt.03.10.13, OIO No.AHM-EXCUS-002-Commr-029-13-14, dt.26.09.13, OIO No.AHM-EXCUS-002-Commr-036-13-14, dt.25.10.13, passed by Commissioner of Central Excise & Customs, Ahmedabad. M/s Thakkar Tobacco Products Pvt.Ltd. M/s Vishnu Pouch Packaging Pvt.Ltd. Appellants Vs CCE Ahmedabad-II Respondent
Represented by:
For Appellants: Shri V.K. Jain, Shri V.S. Shejpal-Advocates Shri N.K. Tiwari, Consultant For Respondent : Shri K. Sivakumar, Addl.Commissioner (AR) Dr. Jeetesh Nagori, Addl.Commissioner (AR) For approval and signature:
Mr. P.K. Das, Honble Member (Judicial) Mr. R.K. Singh, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No 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 Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
MR. P.K. DAS, HONBLE MEMBER (JUDICIAL) MR. R.K. SINGH, HONBLE MEMBER (TECHNICAL) Date of Hearing: 03.02.2015 Date of Decision:06.02.2015 Order No. A/10123-10130/2015 dated 06.02.2015 Per: R.K. Singh
1. The appellants filed these appeals against respective impugned Orders-in-Originals. As the issue involved in these cases is common, these appeals are being disposed of by this common order.
2. The facts, briefly stated, are as under:-
2.1 The appellants had been operating under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008 (hereinafter referred to as the said Rules) and had been paying duty as per Rule 7 under the said Rules. However, in situations where after payment of duty by 5th for a particular month, if the factory remained closed for a period of 15 days or more, they became entitled to abatement under Rule 10 of the said Rules and so while paying duty for the subsequent month, they adjusted the amount of abatement and paid the balance. It is seen that all the requirement for abatement like giving due intimation, getting the machines sealed, giving the due intimation for re-start of production etc had been duly followed and that is not in dispute.
The Revenues case is that the appellants should have paid the duty for the subsequent month in full and should have claimed the abatement separately and accordingly vide the respective adjudication orders, Revenue has confirmed the demand of duty short paid, (along with interest and penalties) in much as it was held that the amount of abatement was not allowed to be offset in this manner by the appellants.
3. The appellants essentially contended that as per Rule 10 of the said Rules, the duty was to be mandatorily abated if the period of closure of entire factory was for more than 15 days continuously as is evident from the words the duty calculated on proportionate basis shall be abated in respect of such period contained in the said Rule and therefore, the adjustments of abatement made by them does not tantamount to duty short paid. They referred to several judgments and Boards circulars in support of their contention.
4. Ld.D.R., on the other hand, stated that the suo moto claim of abatement is not stipulated in Rule 10 ibid and such abatement is subject to review and that the Board vide Circular No.267/16/2009-CX-8, dt.12.03.2009 has also stated that the abatement orders, being in the nature of refund, are required to be subjected to the same administrative procedure of pre and post audit. They cited the judgments of CESTAT in the case of CCE Lucknow Vs K.P. Pan Products Pvt. Ltd 2013 (288) ELT 478 (Tri-Del) and in the case of Shiv Shakti Agrifood Pvt. Ltd. Vs CCE Delhi-I 2012-TIOL-1219-CESTAT-DEL.
5. Extensively heard the arguments and contentions of both sides. At the very outset, it needs to be recorded that in none of the impugned orders, it in dispute that there was a closure of factory for more than 15 days and the required procedure of due intimation of closure, sealing and due intimation of re-opening was followed. In other words, it is not in dispute that the requirements stipulated in Rule 10 of the said Rules were fulfilled. It is also not disputed that the adjustments made were not more than the amounts of duties mandated to be abated as per the said Rule 10.
6. We find that the said Rule 10 does not make any stipulation about the abatement having to be claimed by filing an application therefor although it does not imply anything to be contrary either. We find the Rule 9 of the said Rules in one of its provisos stipulates that in case the amount of duty so recalculated is less than the duty paid for the month, the balance shall be refunded to the manufacturer by 20th day of the following month. When seen in the light of this proviso, there is force in the argument of the appellants that when the intention of the Government was that the amount should be refunded, an express provision was made therefore; in the said Rule 10, there is no such provision.
In this regard, it is seen that in the case of Sri Padma Balaji Steels (P) Ltd Vs CCE Coimbatore 2009 (246) ELT 255 (Tri-Chennai), the Tribunal held as under:-
The claim of the assessees for abatement on the ground that the factory was closed for 9 days and 10 days respectively during the period 18-5-98 to 27-5-98 and 17-6-98 to 27-6-98 has been rejected by the Commissioner on the ground that since closure was for a period of less than one month, the assessee ought to have paid duty liability and then sought abatement, in terms of Rule 96ZO of the Central Excise Rules, 1944.
2.? We have heard both sides and perused the rule in question and find that there is no such stipulation contained therein. Even in case of Rule 96ZQ, where there is such a condition prescribed, the Tribunal has held in the case of Varun Silk Mills P. Ltd. v. CCE, Surat, 2007 (214) E.L.T. 227 (Tri.-Ahmd.) that abatement benefit is a substantial benefit which cannot be denied only on the ground that the assessee did not pay duty first and then claim abatement. In the absence of any such condition in Rule 96ZO, which is relevant rule in the present case, the benefit of abatement should have been extended. The Commissioner has read into a rule something does not exist thereunder. We, therefore, set aside the impugned order and allow the appeal.
7. We find that the Board vide Circular No.331/47/97-CX, dt.30.08.1997, in Para 4(e) observed as under:-
Rule 96ZO has been amended to allow abatement of duty, under?(e) sub-Section (3) of Section 3A of the Central Excise Act, 1944, for the induction furnace units which remain closed for seven or more days. If an induction furnace unit operating under section 3A is continuously closed for not less than 15 days, then pre-payment of duty for the closure period is not to be insisted upon provided the unit has fulfilled all the conditions stated in sub-rule 2 of rule 96ZO. However, the above claim should be subject to verification by the jurisdictional Assistant Commissioner of Central Excise. If such a closure is for a reasonably long period, periodic verification about the continued closure should be done by the jurisdictional Assistant Commissioner of Central Excise. Our attention was also drawn to CBEC Circular No.485/51/, d.15.09.1999, which was issued in relation to Rule 96ZQ as it existed prior to 28.02.1999.
2. The Board has examined the matter. Under rule 96ZQ as it existed prior to 28-2-1999, the prerequisites for grant of abatement on closure of stenter were the stenter should have been completely closed for a continuous period of not less than 7 days and the processor should give at least 3 days notice, before closure, to the Jurisdictional Deputy/Assistant Commissioner. On receipt of the notice, the stenter was required to be sealed in such a manner as prescribed by the Commissioner. If these conditions were satisfied, then the processor was eligible for abatement. Where the stenter was closed as on 16-12-1998 itself, the question of 3 days advance notice for closure did not arise. In that case, the stenter should have been sealed in the aforesaid manner for the purpose of claiming abatement. It would be proper, therefore, that where independent processor is eligible for abatement, it should be granted to him whether he has paid the duty first or did not pay the duty in anticipation of obtaining the order of abatement. Though rule 96ZQ did not contain any specific provision in this regard, there was no specific provision to deny it either.
3. Accordingly,?the Board has decided that the Commissioners should decide first whether the processor was otherwise eligible for abatement or not. In case he is eligible and he had not paid the duty, the abatement should be granted without asking him to pay duty first or where he had paid the duty, he should be reimbursed the amount of duty paid, in terms of the order of abatement issued by the Commissioner. It is seen that the situation obtaining in the present appeals is quite akin to situation dealt with in the above circular dt.28.02.1999. The Adjudicating authority has refused to follow the ratio of the said circular on the ground that the said circular was issued only for the period 16.12.1998 to 27.02.1999. While the Commissioner is technically right in his observation, it needs to be pointed out that the period (upto 27.02.1999) was mentioned in the said circular only because the said Rule was amended w.e.f. 28.02.1999. In the case of Steel Industries of Hindustan Industrial Area Vs CCE Ghaziabad 2013 (293) ELT 191 (All.) while interpreting Rule 96ZP of the erstwhile Central Excise Rules, the Allahabad High Court observed that there is no pre-condition for depositing of duty for claiming abatement under Rule. Earlier, in the case of Varun Silk Mills Pvt. Ltd Vs CCE Surat-I 2007 (214) ELT 227 (Tri-Ahmd.) involving a similar situation, the Tribunal held as under:-
4. I have? carefully considered the facts of the case. There is no dispute on the facts that during the period from 1-8-2000 to 15-8-2000. Stenter with 4 chambers remained closed and appellants were eligible for abatement. The question whether they should have paid Rs. 7 lakhs and taken refund thereafter is basically a question of procedure. I do not think that the substantial benefit should be denied on this ground. It needs to be pointed out that the CESTAT held this view inspite of the fact that the Rule 96ZQ (7)(e) specifically required the payment of duty for the entire period of the month as is evident from the language of that Rule [96ZQ(7)(e)], which is reproduced below:-
When the claim for abatement by the independent processor is for a period of less than one month, he shall be required to pay the duty, as applicable, for the entire period of the month and may subsequently seek such claim after payment of such duty.
Needless to say that such a requirement is conspicuous by its absence in Rule 10 of the said Rules.
Earlier also, the Tribunal in the case of Balkrishna Textile Ltd Vs CCE Ahmedabad 2003 (161) ELT 740 (Tri-Del), in effect held as under:-
It is clarified in the circular that where independent processor was eligible for abatement, it should be granted to him whether he has paid the duty first or did not pay the duty in anticipation of the order of abatement. Though Rule 96ZQ did not contain any specific provision in this regard, there was no specific provision to deny it either. The Board, therefore, decided that the Commissioner should decide first whether the processor was otherwise eligible for abatement or not. In case he is eligible and he had not paid the duty, the abatement should be granted without asking him to pay the duty first or where he had paid the duty, he should be reimbursed the amount of duty paid, in terms of order of abatement issued by the Commissioner. Therefore, the appellants are eligible to the abatement of duty for the period 1-2-99 to 28-2-99.
8. As regards the ld.D.R.s reference to the judgment in the case of Shivshakti Agrifoods Pvt. Ltd. (supra), the issue there was abatement of duty on some machines which were in sealed condition during the month and the Tribunal held that the abatement under said Rule 10 cannot be given in respect of individual machines. Thus, this judgment is not relevant to the present appeals.
The reference was also made by ld.D.R. to the case of K.P. Pan Products Pvt.Ltd (supra) but the issue there was whether the continuous period of 15 days of closure of the factory should necessarily fall during a particular calendar month and the Tribunal held that the said period of 15 days of continuous closure could fall in the two adjacent months also. Thus, this judgment is of no avail to the Revenue. As regards the Boards circular dt.12.03.2009 stating that the abatements are subject to pre/post-audit, we do not necessarily see any fatally irreconcilable contradiction between the Boards circulars dt.15.09.1999 & 30.08.1997 on the one hand and the one dt.12.03.2009 on the other in as much as when the adjustment of abatement has been made, nothing prevents Revenue froma auditing the correctness thereof. More importantly, the Boards circulars have no statutory force and have to be ignored to the extent they are in conflict with the judicial pronouncements.
9. It is quite evident from the foregoing that apart from the Boards circulars dt.30.08.1997 and 15.09.1999 referred to earlier, in a series of judicial pronouncements, a consistent approach has been taken to the effect that in case of such adjustment of duty which is mandatorily required to be abated (as has been done in these cases), Revenue can not insist upon recovery of the amount so adjusted.
10. In the light of the above, being unable to uphold the impugned orders, we allow the appeals.
(Pronounced in Court on __________________)
(P.K. Das) (R.K. Singh)
Member (Judicial) Member (Technical)
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