2025 (1) TMI 1316 - AT - Central Excise

Factory eligible for excise duty refund during eight-day closure following Supreme Court order

CESTAT Bangalore allowed appellant's appeal for refund of excise duty paid during factory closure period. Factory was closed for eight days (09.02.2011 to ... Refund of Excise duty paid for the period when the factory belonging to the appellant was closed due to the order of the Hon’ble Supreme Court - HELD THAT:- The issue in the present appeal is squarely covered by the decision of the Hon’ble Tribunal in appellant’s own case [2015 (9) TMI 514 - CESTAT AHMEDABAD]. In the above matter, Tribunal held that 'There is no bar on reopening of the factory in Rules 2008, which is a subsequent event. Further, the appellant in its letter dated 8.2.2011 categorically stated that they were giving intimation of closure of the factory-as required under the Rules, would be implied surrender of registration. It is already observed that in the present case, taking into account of order of Hon’ble Supreme Court, notification of Ministry of Environment and Forest, and the letter dated 8.2.2011 of the appellant to close down their factory and further consequence of surrender of registration may not be followed due to subsequent order dated 17.2.2011 of Hon’ble Supreme Court, the appellant should not be penalized by rejecting the refund claims, for the reason, they had re-opened the factory and such reading of the said provision, would be totally unjust, improper and against all cannons of natural justice and fair play.' There are no reason to take a different view in the matter. Considering the above, since the factory was closed in deference of the Hon'ble Apex Court's order, the appellant is eligible for refund of duty paid in advance for the period from 09.02.2011 to 16.02.2011 8(eight) days. Conclusion - The appellant is eligible for a refund of the duty paid in advance for the eight-day period when the factory was closed. Manufacturers should not be penalized for following judicial orders, and procedural requirements should be interpreted in light of fairness and justice. Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe core legal issue considered in this judgment is whether the appellant is entitled to a refund of the excise duty paid for the period when their factory was closed due to an order from the Hon'ble Supreme Court. Specifically, the period in question is from 08.02.2011 to 16.02.2011, during which the appellant's factory was non-operational.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe appellant operates under the compounded levy scheme as per Notification No. 30/2008-CE (NT) dated 01.07.2008, which governs the payment of excise duty based on the number of machines intended for use. The relevant legal provisions include Section 11B of the Central Excise Act, 1944, which deals with the refund of duty, and Rule 16 of the Rules 2008, which addresses the procedure when a manufacturer ceases to operate.The Tribunal referenced its own previous decision in the appellant's case, reported in 2015 (330) E.L.T. 639 (Tri.-Ahmd.), where it was held that the appellant was entitled to a refund under similar circumstances.Court's Interpretation and ReasoningThe Tribunal noted that the appellant had informed the Department of the factory closure due to the Supreme Court's order, which was beyond their control. The Tribunal emphasized that procedural lapses, such as the lack of a three-day advance intimation, should not bar the refund when substantial duty was paid without corresponding manufacturing activity.The Tribunal also considered the peculiar facts of the case, including the Supreme Court's order and subsequent stay, which led to the temporary closure and reopening of the factory. It reasoned that the appellant's actions were in compliance with the legal mandates and that denying the refund would be unjust.Key Evidence and FindingsThe appellant's letter dated 07.02.2011, notifying the Department of the closure, and the subsequent sealing of the machines by the jurisdictional Range Officer were pivotal. The Tribunal found that the factory was indeed non-operational from 08.02.2011 to 16.02.2011, as the machines were sealed and later de-sealed following the Supreme Court's stay order.Application of Law to FactsThe Tribunal applied Rule 16 of the Rules 2008 and Section 11B of the Central Excise Act, 1944, to conclude that the appellant was entitled to a refund for the period when the factory was closed. It determined that the appellant's compliance with the Supreme Court's order and subsequent reopening did not negate their eligibility for a refund.Treatment of Competing ArgumentsThe Revenue argued that the appellant was not eligible for a refund because the factory reopened on 17.02.2011 and had not surrendered its registration. The Tribunal rejected this argument, stating that the reopening of the factory was a subsequent event allowed under the rules, and there was no prohibition against reopening after declaring a temporary cessation of operations.ConclusionsThe Tribunal concluded that the appellant was entitled to a refund of the excise duty paid for the period from 09.02.2011 to 16.02.2011, when the factory was closed due to the Supreme Court's order. It held that the procedural requirements were substantially met, and the appellant should not be penalized for circumstances beyond their control.SIGNIFICANT HOLDINGSThe Tribunal held that the appellant is eligible for a refund of the duty paid in advance for the eight-day period when the factory was closed. It emphasized that the closure was in compliance with the Supreme Court's order, and procedural lapses should not prevent the refund. The Tribunal's decision reinforced the principle that manufacturers should not be penalized for following judicial orders, and procedural requirements should be interpreted in light of fairness and justice.Final Determinations on Each IssueThe Tribunal allowed the appeal, granting the appellant a refund for the period from 09.02.2011 to 16.02.2011, with consequential relief in accordance with the law. This decision was based on the interpretation of relevant legal provisions and the Tribunal's previous rulings in similar cases.