2017 (5) TMI 449 - AT - Central Excise

Tribunal grants abatement claim for Pan Masala production due to compliance impossibility. Commissioner's observations dismissed.

M/s. MSS Food Processors Versus CCE, Indore

M/s. MSS Food Processors Versus CCE, Indore - 2017 (358) E.L.T. 974 (Tri. - Del.) Issues:1. Duty demand on Pan Masala and Gutka manufacturing.2. Closure of factory and eligibility for abatement claim.3. Compliance with notification requirements for abatement claim.4. Scope of show cause notice and observations made beyond it.Issue 1: Duty demand on Pan Masala and Gutka manufacturing:The appellant, engaged in manufacturing Pan Masala and Gutka, faced a duty demand of Rs. 55,76,618. The appeals related to this demand were clubbed together for a common order.Issue 2: Closure of factory and eligibility for abatement claim:The appellant's factory was closed due to lack of orders, with machines sealed under panchnama. The appellant sought abatement for the period of closure, but the claim was denied based on the closure duration and compliance with notification conditions.Issue 3: Compliance with notification requirements for abatement claim:The key contention was the appellant's compliance with the notification requirements for abatement claim. The notification required an intimation prior to closure, but the closure date coincided with the introduction of the rule, making compliance impossible. The principle of lex non cogit ad impossibiia was applied to support the appellant's claim.Issue 4: Scope of show cause notice and observations made beyond it:The Commissioner's observations went beyond the scope of the show cause notice, questioning the closure date and panchnama details. The Tribunal found the observations to be based on assumptions and not supported by evidence, leading to the setting aside of the impugned orders.In analyzing the judgment, the Tribunal noted that the appellant's compliance with the notification requirements was impossible due to the closure date aligning with the rule's introduction. Citing legal principles and past judgments, the Tribunal upheld the appellant's entitlement to the abatement claim. The Commissioner's observations were deemed speculative and beyond the show cause notice's scope, lacking factual basis. Consequently, the impugned orders were set aside, and the appeals were allowed, emphasizing the importance of adherence to legal provisions and procedural fairness in tax matters.