2017 (10) TMI 76 - AT - Central Excise

Tribunal grants appellant abatement on factory closure, rules in favor of non-imposition of penalty.

The Tribunal allowed the appellant's appeal, dismissing the Revenue's appeal. The appellant succeeded in obtaining abatement for factory closure under the ... Suo moto Abatement for the period of closure of factory - Pan Masala Packing Machines (Collection of Duty and Determination of Capacity) Rules, 2008 - Held that: - similar issue is squarely covered by the ruling of Hon’ble Gujarat High Court in Thakkar Tobacco Products Private Ltd. [2015 (11) TMI 319 - GUJARAT HIGH COURT] in favor of the appellant, where it was held that When the rules do not provide for the manner in which duty is required to be abated, nor do they provide that abatement shall be by an order of the Commissioner or any authority, but nonetheless provide for abatement of duty and the extent of entitlement to such abatement, no fault can be found in the approach of the assessee in suo motu taking the benefit of such abatement. Demand of interest u/s 11AB - Held that: - the restarting of operation of the factory subsequent to 05/08/2009, amounts to increase in the number of operating packing machines in the factory during the month - the payment of duty was required to be made by the 5th day of the next month, being September, 2009, which admittedly have been paid on such date - no interest is payable under Section 11 AB of the Act by the appellant assessee in the facts of this case. Whether the appellant is entitled to abatement, as they have cleared raw material and packing goods which are not the notified goods? - Held that: - the intention of legislature has been clarified by the subsequent amendment that the word goods appearing in the second part of the first proviso are only notified goods and nothing else. In this view of the matter, we set aside the impugned order and allow the appeal with consequential benefits. Appeal allowed - decided in favor of appellant. Issues Involved:1. Denial of abatement for factory closure under Pan Masala Packing Machines Rules, 2008.2. Demand of duty and interest for non-operation of packing machines.3. Non-imposition of penalty by the Commissioner.4. Entitlement to abatement for cleared raw material and packing goods.Analysis:1. The first issue pertains to the denial of abatement for factory closure under the Pan Masala Packing Machines Rules, 2008. The appellant argued that they did not violate any provisions by taking suo moto abatement, citing a ruling by the Gujarat High Court. The Tribunal found in favor of the appellant, relying on the precedent set by the Gujarat High Court, and ruled against the Revenue.2. The second issue revolves around the demand of duty and interest due to non-operation of packing machines. The Tribunal determined that the restarting of factory operations post-closure constituted an increase in the number of operating packing machines, requiring duty payment by the 5th day of the following month. As the duty was paid on time, the Tribunal held that no interest was payable by the appellant.3. The third issue concerns the non-imposition of a penalty by the Commissioner under Section 11AC of the Act. The Tribunal did not delve into this issue explicitly in the judgment, indicating that no penalty was imposed by the Commissioner in this case.4. The final issue addresses the entitlement to abatement for cleared raw material and packing goods. The Tribunal referred to a previous case involving the same appellant, where it was held that the term 'goods' in the context of abatement referred only to notified goods, not inputs. The Tribunal upheld this interpretation, allowing the appeal in favor of the appellant and directing the Adjudicating Authority to grant the refund with interest within a specified timeframe.In conclusion, the Tribunal allowed the appeal by the appellant and dismissed the appeal filed by the Revenue, granting consequential benefits to the appellant in accordance with the law.