2017 (9) TMI 2006 - AT - Central Excise

Tribunal orders factory closure period reassessment for abatement eligibility, stresses fairness and evidence admission.

M/s Classic Tobacco Products Ltd. Versus C.C.E. Jaipur

The Tribunal allowed the appellant's appeal by remanding the matter to the adjudicating authority for accurate determination of the factory closure period ... Abatement claim under Compounded Levy scheme - all the four machines were closed - Department has not allowed abatement by mentioning that the abatement is allowable by way of refund - HELD THAT:- It appears that in the case of TRIMURTI FRAGRANCES PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [2015 (8) TMI 34 - CESTAT NEW DELHI] it was observed that this issue stands settled in favour of the appellant by the judgment of Hon’ble Allahabad High Court in the case of STEEL INDUSTRIES OF HINDUSTAN INDUSTRIAL AREA VERSUS CCE., GHAZIABAD [2013 (10) TMI 172 - ALLAHABAD HIGH COURT], wherein in respect of similar provisions regarding levy of duty on compounded basis in respect of iron and steel product, Hon’ble High Court had held that for claiming the abatement for the period of closure of the factory, depositing duty for the whole month is not a pre-condition and that in such cases the duty would be required to be paid only for the number of days for which a factory was working. It may be mentioned that in the factory, there were only four machines. If four machines are sealed then certainly factory is closed for the purpose of production. From the impugned order, it is not clear that for what period the four machines were closed. In other words, when the factory was closed. Matter remanded back to the adjudicating authority to decide the period for closure of the factory and allow the suo motto abatement but by providing reasonable opportunity to the appellant - appeal allowed by way of remand. Issues:Claim of suo motto abatement for the period of machine closure.Analysis:The appellant, engaged in manufacturing chewing tobacco, filed an appeal against Order-in-Original No. 32/15-16 dated 23.10.2015, covering the period of dispute from November 2011 to March 2012. The appellant claimed suo motto abatement for the period when all four machines were sealed by the Department, contending that the abatement should be allowed without the requirement of depositing duty first. However, the Department insisted on duty deposit followed by a refund claim. The Tribunal referred to a previous case involving Trimurti Fragrances Pvt. Ltd., where it was held that duty need only be paid for the days the factory was operational, not for the entire month. The Tribunal emphasized that the duty demand would not be sustainable due to the closure period, but interest on the net duty payable for the delayed payment would be applicable as per the law.The Tribunal noted that the closure of all four machines in the factory indicated a production halt. However, the impugned order lacked clarity on the duration of the machine closure, i.e., when the factory was closed. Therefore, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to determine the period of factory closure accurately. The Tribunal directed that the suo motto abatement should be allowed only if no machine was operational during any part of the month, emphasizing the importance of providing a reasonable opportunity to the appellant. The Tribunal also allowed the admission of fresh evidence if necessary, in accordance with the law.In conclusion, the appeal filed by the appellant was allowed by way of remand, with the Tribunal instructing the adjudicating authority to reassess the factory closure period for granting the suo motto abatement, ensuring fairness and adherence to legal procedures.