TaxTMI 
TaxTMI 
2024 (3) TMI 792
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....e to the Central Excise Tariff Act, 1985. They were discharging Central Excise duty on the basis of capacity of production under Section 3A of the Central Excise Act read with Pan Masala Packing Machines Capacity Determination and Collection of Duty) Rules, 2008. 2.2 During the month of January there were 88 (Eighty Eight) Pouch Packing Machines available in the unit in which 83 (Eighty Three) machines were installed and 05 (Five) machines were in sealed/uninstalled condition. Appellant filed Form F-1 on 27.12.2010 in terms of Rule 6(1) in which 83 machines were declared as installed and paid the central excise duty amounting Rs. 12,84,00,000/-(Twelve crore eighty four lacs) vide GAR-7 dated 04.01.2011 in terms of Rule 7, accordingly the party filed Form F-2 on 10.01.2011 in terms of Rule 9. 2.3 A fire accident broke out on the top floor of the unit in the evening of 13.01.2011. After the accident, the unit remained closed till 18.01.2011. They party informed the department regarding closure of the unit due to fire accident vide their letter dated 14.01.2011 along with Form-l. 2.4 As per the direction of jurisdictional Assistant Commissioner, all the 83 (Eighty Three) inst....
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....was the only factor relevant for production in terms of Rule 4 of the Rules were sealed and uninstalled, the legal fiction with respect to deemed manufacture cannot operate. Thus, it is beyond any cavil that, the appellant cannot be deemed to have been manufacturing notified goods during the period between 14/01/2011 and 18/01/2011 (both days inclusive). Rules provide for proportionate calculation of duty, Rule 7 of the Rules provides that the duty payable for a particular month is to be calculated with respect to the number of operating packing machines in the factory during the month. Thus, the said Rule also clarifies that duty is payable only with respect to operating packing machines. Duty was paid by the appellant in advance on 04/01/2011 for the month of January, 2011 in accordance with Rule 9 of the Rules. The fourth, fifth and the last provisos to Rule 9 clearly provide for calculation of pro rata duty on the basis of the total number of days in that month. Abatement of duty as provided for in rule 10 not applicable to the present case and rule 21 of the Central Excise Rules, 2002 is attracted in the present case, and loss of goods is nothing but....
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....or five days in the month of January, 2011. Rule 10 of the Rules with respect to abatement are ex facie inapplicable in the facts of the instant case, the only option which remained was to prefer an application seeking remission under Rule 21 of the Central Excise Rules,2002. it is well settled by a large number of judicial pronouncements hat a litigant cannot be remedy less. Department cannot be unjustly enriched at the expense of an assessee as has been held in the following cases: Kanhaiya Lal Makund Lal Saraf, [1958 SCC OnLine SC 28 = AIR 1959 SC 135]. P. Rama Rao 1989 SCC OnLine Ori 341], Fire due to short circuit is nothing but an unavoidable accident in terms of rule 21 of the central excise rules. The report of the fire department dated 07/02/2011 nowhere mentions that the fire broke out due to gross negligence on the part of the appellant, as has been incorrectly observed by the Ld. Commissioner. On the other hand, it is specifically observed in the said report that the fire possibly broke out due to short circuit in the line going from the generator. Such fire accidents due to short circuit have been considered as unav....
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.... Provided further that where such duty exceeds ten thousand rupees but does not exceed one lakh rupees, the provisions of this rule shall have effect as if for the expression "Commissioner", the expression "Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be" has been substituted Provided also that where such duty exceeds one lakh rupees but does not exceed five lakh rupees, the provisions of this rule shall have effect as if for the expression "Commissioner", the expression "Joint Commissioner of Central Excise or Additional Commissioner of Central Excise, as the case may be" has been substituted. Bare reading of above, the term "remission" means waiver of Central Excise duty legally payable. According to Rule 21 of the Central Excise Rules , 2002 remission of duty can be granted in the following cases a) Goods have been lost or destroyed by natural causes. b) Goods have been lost or destroyed by unavoidable accident. c) Goods are claimed by the manufacturer as unfit for consumption or for marketing. at any time before removal, subject to such conditions as may be im....
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....and unsealed by the department on 14.01.2011 at 20:00 hrs. and 19.01.2013 at 00:30 hrs. respectively on the request of the party which is total 04 (four) days. I have also gone through the Rule 8 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 which reads as under: Rule 8 Alteration in number of operating packing machines. In case of addition or installation or removal or uninstallation of a packing machine in the factory during the month, the number of operating packing machine for the month shall be taken as the maximum number of packing machines installed on any day during the month: Provided that in case a manufacturer commences manufacturing of goods of a new retail sale price during the month on an existing machine it shall be deemed to be an addition in the number of operating packing machine for the month: Provided further that in case of non-working of any installed packing machine during the month, for any reason whatsoever, the same shall be deemed to be operating packing machine for the month. The aforesaid proviso of Rule 8 clearly states that in case of non-working of any installed....
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....shed that the appellants are availing the facilities under the Compound Levy Scheme, which they themselves, opted for and filed declarations furnishing details about annual capacity of production and duty payable on such capacity of production. It has to be taken into consideration that the compounded levy scheme for collection of duty based on annual capacity of production under Section 3 of the Act and Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 is a separate scheme from the normal scheme for collection of central excise duty on goods manufactured in the country. Under the same, Rule 96P of the Rules stipulate the method of payment and Rule 96P contains detailed provision regarding time and manner of payment and it also contains provisions relating to payment of interest and penalty in event of delay in payment or non-payment of dues. Thus, this is a comprehensive scheme in itself and general provisions in the Act and Rules are excluded. 13. The judgments of this court in the cases of Commissioner of C. EX & Customs v. Venus Castings (P) Ltd as reported in 2000 (117) ELT 273 (SC) = 2002-TIOL-113-SC-CX and, Union of India v. Supreme Steels and Gen....
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....ated above, it will have to be declared that since Section 3A which provides for a separate scheme for availing facilities under a compound levy scheme does not itself provide for the levying of interest, Rules 96ZO, 96ZP and 96ZQ cannot do so and therefore, on this ground the appellant in Shree Bhagwati Steel Rolling Mills has to succeed. On this ground alone therefore, the impugned judgment is set aside. That none of the other provisions of the Central Excise Act can come to the aid of the Revenue in cases like these has been laid down by this Court in Hans Steel Rolling Mill v. CCE, (2011) 3 SCC 748 = 2011 (265) E.L.T. 321 (S.C.) as follows: 13 ...." 4.6 Hon'ble Madras High Court has in case of Kalai Magal Alloy Steel Pvt. Ltd [2014 (303) ELT 44 (Mad)] (this decision has been affirmed by the Hon'ble Supreme Court as reported at [2015 (321) ELT A52 (SC)] held as follows "8. The first issue to be considered, is as to whether Section 11A of the Act has any application to the case on hand, in the light of the fact that the assessee has availed the benefit of a specially compounded levy scheme as envisaged under Rule 96ZP of the Rules. Learned Counsel for the assessee ....
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....it was held that Section 11A of the Act is not an omnibus provision, which stipulates limitation for every kind of action to be taken under the Act and Rules, and an example was cited with regard to the Modvat Scheme and was further held that even in that particular scheme, Section 11A of the Act had no application with regard to the time-limit in the administration of that scheme. The Hon'ble Supreme Court further took note of the decision in the case of Commissioner of Central Excise & Customs v. Venus Castings (P) Ltd. (supra) and held that it has squarely laid down the principle that compounded levy scheme is a separate scheme altogether and the assessee opting for the scheme, is bound by the terms of that particular scheme and Section 11A of the Act has no application for recovery under the different schemes." 4.7 Taking note of the above decisions, Hon'ble Madras High Court has in case of Arun Smelters Ltd [2016-TIOL-2203-HC-Mad] held as follows: 39. Though Mr.K.Jayachandran, learned counsel for the appellant submitted that sub-Rule (3) of Rule 96ZO(II) of the Central Excise Rules, 1944, opens with a notwithstanding clause and therefore, arrears of duty, payable b....
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....g should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation and where a statute is penal in character, it must be strictly construed and followed." 41. ..... 42. Now let us consider the decisions relied on by the learned counsel appearing for both the parties. The main thrust of the appellant is on the decision of the Punjab and Haryana High Court in Commissioner of Central Excise, Ludhiana v. Punjab Casting Pvt. Ltd., reported in 2014 (306) ELT 612 (P & H), wherein, the respondent therein was engaged in the manufacture of non-alloy steel ingots. The assessee debited the Cenvat Credit Account of inputs for discharging their liability of payment of excise duty for the period under the Compounded Levy Scheme. The appellant therein contended that the respondent therein could not have made use of Cenvat Credit Account and the duty had to be paid only through Personal Ledger Account and finding fault with the procedure in payment of duty, the Adjudicating Authority i.e., the Joint Commissioner, Customs & Central Excise confirmed the demand and also imposed interest. He disallowed the duty discharged t....
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....the terms of that particular scheme, reliance made on the decision of the Punjab and Haryana High Court in Punjab Casting Pvt. Ltd.,'s case (cited supra), is not tenable, as the law of the land is binding on us. 4.8 Appellant has argued that if they are not allowed to avail the benefit of Rule 21 of the Central Excise Rules, 2002, then they will be rendered remedy less. This could not be correct in view of the various judicial pronouncements. However we do not find any merits in the said argument. It is settled principle of interpretation of statute that court or tribunal should interpret the word as used in law without any addition or deletion from the same. A five judges bench of Hon'ble Supreme Court has in the case of Dilip Kumar & Co [2019 (361) ELT 577 (SC)] held as follows: "19. The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the inte....
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....guage in the statute is plain and unambiguous, the Court has to read and understand the plain language as such, and there is no scope for any interpretation. This salutary maxim flows from the phrase "cum inverbis nulla ambiguitas est, non debet admitti voluntatis quaestio". Following such maxim, the Courts sometimes have made strict interpretation subordinate to the plain meaning rule [Mangalore Chemicals case (Infra para 37).], though strict interpretation is used in the precise sense. To say that strict interpretation involves plain reading of the statute and to say that one has to utilize strict interpretation in the event of ambiguity is self-contradictory. 23. Next, we may consider the meaning and scope of „strict interpretation', as evolved in Indian law and how the higher Courts have made a distinction while interpreting a taxation statute on one hand and tax exemption notification on the other. In Black's Law Dictionary (10th Edn.) „strict interpretation' is described as under : Strict interpretation. (16c) 1. An interpretation according to the narrowest, most literal meaning of the words without regard for context and other permissible meanings. 2. An....
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....sult may be. Unless otherwise provided, the same word must normally be construed throughout the Act in the same sense, and in the case of old statutes regard must be had to its contemporary meaning if there has been no change with the passage of time." That strict interpretation does not encompass strict - literalism into its fold. It may be relevant to note that simply juxtaposing „strict interpretation' with literal rule' would result in ignoring an important aspect that is „apparent legislative intent'. We are alive to the fact that there may be overlapping in some cases between the aforesaid two rules. With certainty, we can observe that, „strict interpretation' does not encompass such literalism, which lead to absurdity and go against the legislative intent. As noted above, if literalism is at the far end of the spectrum, wherein it accepts no implications or inferences, then „strict interpretation' can be implied to accept some form of essential inferences which literal rule may not accept. 25. We are not suggesting that literal rule de hors the strict interpretation nor one should ignore to ascertain the interplay between „stri....
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....imply adhere to the words of the statute. VISCOUNT SIMON quoted with approval a passage from ROWLATT, J. expressing the principle in the following words : "In a taxing Act one has to look merely at what is clearly said. This is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." It was further observed : "In all tax matters one has to interpret the taxation statute strictly. Simply because one class of legal entities is given a benefit which is specifically stated in the Act, does not mean that the benefit can be extended to legal entities not referred to in the Act as there is no equity in matters of taxation...." Yet again, it was observed : "It may thus be taken as a maxim of tax law, which although not to be overstressed ought not to be forgotten that, "the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax on him", [Russel v. Scott, (1948) 2 All ER 1]. The proper course in construing revenue Acts is to give a fair and reasonable construction to their languag....
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.... as „Kesoram Industries case' for brevity]. In the later decision, a Bench of seven-Judges, after citing the above passage from Justice G.P. Singh's treatise, summed up the following principles applicable to the interpretation of a taxing statute : "(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed : it cannot imply anything which is not expressed : it cannot import provisions in the statute so as to supply any deficiency : (ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of Legislature's failure to express itself clearly"." Whether the interpretation placed by the Commissioner on second proviso to rule 8 of Pan Masala Packing Machines (Capacity Determination ....
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....eriod, who on receipt of such intimation shall direct for sealing of all the packing machines available in the factory for the said period under the physical supervision of Superintendent of Central Excise, in the manner that these cannot be operated during the said period: Provided that during such period, no manufacturing activity, whatsoever, in respect of notified goods shall be undertaken and no removal of notified goods shall be effected by the manufacturer except that notified goods already produced before the commencement of said period may be removed within first two days of the said period: Provided further that when the manufacturer intends to restart his production of notified goods, he shall inform to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, of the date from which he would restart production, whereupon the seal fixed on packing machines would be opened under the physical supervision of Superintendent of Central Excise." 4.10 In case of Thakkar Tobacco Products P. Ltd.[2016 (332) E.L.T. 785 (Guj.)], Hon'ble Gujarat High Court ahs observed as follows: "6. Before adverting ....
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....eriod of fifteen days or more, Rule 10 of the PMPM Rules provides for abatement of duty for the period during which the factory was not producing such notified goods. 8. The controversy involved in the present case centers around the interpretation of Rule 10 of the PMPM Rules, which reads thus : ..... 9. The facts of the case are required to be examined in the light of the above statutory provisions. From the facts noted hereinabove, it is apparent that the assessee did not produce the notified goods during a continuous period of fifteen days in the month of March and accordingly claimed that it was entitled to abatement of duty on a proportionate basis for the period when the factory was not producing notified goods and accordingly adjusted duty to that extent from the duty payable in the month of April. The contention of the Revenue is that abatement amounts to refund and, therefore, the procedure for availing refund as laid down under Section 11B of the Act is required to be followed. In this regard, it may be noted that the expression "abatement" has not been defined anywhere in the Act or in the PMPM Rules. Therefore, the popular or dictionary meani....
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....f Central Excise, in the manner that these cannot be operated during the said period. Thus, subject to the fulfilment of such conditions, Rule 10 of the PMPM Rules provides that the duty calculated on a proportionate basis shall be abated." 4.11 The 2008 Rules have been considered by the Hon'ble Allahabad High Court in case of Trimurti Fragrances Pvt. Ltd [2019 (370) E.L.T. 257 (All.)] and following has been held: 22. The sole issue under consideration is as to giving benefit of abatement for non-production, whether the assessee could on their own calculate Excise duty and set off the same against the duty payable in the next month. The argument of the Department relying upon Rule 9 of the PMPM Rules, 2008 claiming that the monthly duty on notified goods is to be paid by 5th day of the month and the assessee cannot simpliciter claim set off without first depositing the same had been repelled by the Gujarat High Court in the case of Thakker Tobacco (supra) holding that Rule 10 of the PMPM Rules, 2008 envisages a situation and provides for abatement of excise duty calculated on proportionate basis, in case where factory does not produces notified goods during continuous p....
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....he statutory provisions as per the Central Excise Act, 1944 and the Rules. 4.13 As we do not find Rule 21 of the Central Excise Rules, 2002 to be not applicable to the present case we are not pronouncing on various decision relied upon by the Appellant with regards to "natural cause or unavoidable accident." Whether by rejecting the claim for remission the department is unjustly enriched. 4.14 Reliance has been placed by the Appellant on the decision of Hon'ble Supreme Court in the case of Kanhaiya Lal Mukund Lal Saraf, to argue that the revenue cannot be unjustly enriched at the expense of assessee. Howver we note that the said decision has been held to be not a good law by a nine judges bench of Hon'ble Supreme Court in the case of Mafatlal Industries [1997 (89) ELT 247 (SC)]. By majority Hon'ble Apex Court held as follows: WAS KANHAIYALAL CORRECTLY DECIDED AND IF NOT, IN WHAT RESPECTS ? 67. The first question that has to be answered herein is whether Kanhaiyalal has been rightly decided insofar as it says (1) that where the taxes are paid under a mistake of law, the person paying it is entitled to recover the same from the State on establishing a mista....
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....ting to refund is beyond question, they constitute "law" within the meaning of Article 265 of the Constitution. lt follows that any action taken under and in accordance with the said provisions would be an action taken under the "authority of law", within the meaning of Article 265. In the face of the express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with the said provision, it is not permissible to resort to Section 72 of the Contract Act to do precisely that which is expressly prohibited by the said provisions. In other words, it is not permissible to claim refund by invoking Section 72 as a separate and independent remedy when such a course is expressly barred by the provisions in the Act, viz., Rule 11 and Section 11B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in Rule 11/Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the Act.....
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....elongs to a third party - neither to the petitioner/plaintiff nor to the State - and to such third party it must go. But where it cannot be so done, it is better that it is retained by the State. By any standard of reasonableness, it is difficult to prefer the petitioner-plaintiff over the State. Taxes are necessary for running the State and for various public purposes and this is the view taken in all jurisdictions. It has also been emphasised by this Court In D. Cawasji wherein Mathew, J. not only pointed out the irrational and unjust consequences flowing from the holding in Bhailal Bhai and Aluminium Industries but also pointed out the adverse impact on public interest resulting from the holding that expending the taxes collected by the State is not a valid defence. (see Paras 39 and 40). This would not be a case of unjust enrichment of the State, as suggested by the petitioners-appellants. The very idea of "unjust enrichment" is inappropriate in the case of the State, which is in position of parens patrea, as held in Charan Lal Sahu v. Union of India [1990 (1) S.C.C. 613 at 649]. And even if such a concept is tenable, even then, it should be noticed that the State is not being ....
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....ords in the preamble constitute the motto of our Constitution, if we can call it one. Article 38 enjoins upon the State to "strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political shall inform all the institutions of the national life". Article 39 lays down the principles of policy to be followed by the State. It says that the State shall, in particular, direct its policy towards securing "(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; and (c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment". Refunding the duty paid by a manufacturer/assessee in situations where he himself has not suffered any loss or prejudice (i.e., where he has passed on the burden to others) is no economic justice; it is the very negation of economic justice. By doing so, the State would be conferring an unearned and unjstifiable windfall upon the manufacturing community thereby contributing to concentration of wealth in a small class o....
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....uld be the expression of a new law created by Indians for Indians," 77. That "the material resources of the community" are not confined to public resources but include all resources, natural and man-made, public and private owned" is repeatedly affirmed by this Court. [See Ranganatha Reddy, Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal [1983 (1) S.C.R. 1000] and State of Tamil Nadu etc. etc. v. L. Abu Kavur Bai & Ors. etc. [1984 (1) S.C.R. 725]. We are of the considered opinion that Sri Parasaran is right in saying that the philosophy and the core values of our Constitution must be kept in mind while understanding and applying the provisions of Article 265 of the Constitution of India and Section 72 of the Contract Act (containing as it does an equitable principle) - for that matter, in construing any other provision of the Constitution and the laws. Accordingly, we hold that even looked at from the constitutional angle, the right to refund of tax paid under an unconstitutional provision of law is not an absolute or an unconditional right. Similar is the position even if Article 265 can be invoked - we have held, it cannot be - for claiming refund of taxes collected....