1. This appeal is filed against OIA-RAJ-EXCUS-000-APP-117-2017-18 dt. 06/11/2017 passed by the Commissioner (Appeals), Central Excise, Customs and Service Tax-RAJKOT.
2. The brief facts of the case area that the appellants are engaged in the manufacture of unmanufactured tobacco falling under CH 24.01 of CETA, 1985. The appellant had intimated the Dept. on 30.10.2015 about non production of finished good using FFS machine during the month of November 2015, under the Chewing Tobacco and unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty), Rules 2010. They have intimated the Dept. about the commencement of the production of 5 gm pouches bearing MRP Rs. 3/- of unmanufactured Tobacco on FFS packing machine with effect from 1.12.2015. Later they have intimated the Dept. on 4.12.2015 their intention to stop production of goods from 10.12.2015. Consequently, their FFS packing machine was sealed by the jurisdictional Superintendent in the mid-night of 9/10.12.2015. Thus, the machine was used only for 9 days. On the visit of Preventive Officer to their factory on 11.12.2015, it was found that the appellant had also manufactured 8 gms/10 gms of pouches bearing MRP of Rs. 5/- by altering the cylinder on testing/trial basis in December 2015. The appellant had earlier paid duty of Rs. 35.91 lacs for the month of December 2015 declaring the MRP of the product at Rs. 3/-, as per Sr. No. 4 of Notification No. 16/2010-CE dtd. 27.2.2010, after filing necessary forms. However, later, on being directed they have deposited Rs. 20 lacs further considering the MRP of the pouch as Rs. 5.00 instead of Rs. 3.00 as declared. Consequently, they claimed abatement of duty of Rs. 39,69,548/- on account of closure/non-production of goods during 10.12.2015 to 31.12.2015 after deducting their liability of Rs. 16,21,452/-, payable calculating the MRP as Rs. 5/- for the period 1.12.2015 to 9.12.2015. The Adjudicating Authority sanctioned the refund of Rs. 39,69,548/- observing that there was no production due to the closure of the factory between 10.12.2015 to 31.12.2015. Aggrieved by the said refund order, the Revenue filed appeal before the Ld. Commissioner (Appeals) challenging the amount of Rs. 14,51,097/- from the total refund sanctioned. The Ld. Commissioner (Appeals) allowed Revenues appeal. Hence, the present appeal.
3. The Ld. Advocate for the appellants submits that there is no dispute of the fact that the appellant had closed down their factory between 10.12.2015 and 31.12.2015 after filing necessary intimation and following the procedure laid down under Rule 10 of the Chewing Tobacco and unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty). The Ld. Commissioner (Appeals) erred in rejecting the refund claim observing that the appellant had not intimated the fact of production of un-manufactured Tobacco utilizing their FFS packaging machine of pouches of 8 gms/10 gms bearing the MRP of Rs. 5/-, therefore, they are not eligible to the abatement claim for the closure of the factory during the said period.
4. The Ld. AR for the Revenue reiterated the findings of the Ld. Commissioner (Appeals).
5. I find the undisputed facts are that the appellant during the period 1.12.2015 to 31.12.2015 initially paid duty of Rs. 35.90 lacs for the month of Dec. 2015 declaring that they would produce unmanufactured tobacco on FFS packing machine 5 gms of pouches bearing MRP of Rs. 3/-. On 4.12.2015, they intimated the Dept. about closure of their factory from 10.12.2015. Consequently, the machine was sealed on 09/10.12.2015. Later, on visit of the Preventive Officers, it revealed that the appellant instead of manufacturing only pouches of 5 gms bearing MRP of Rs. 3/-, also on trial run basis produced 8 gms/10 gms of pouches bearing MRP of Rs. 5/-. Accordingly, the liability for payment of duty was arrived at Rs. 55.85 lacs for the whole month of December 2015, which the appellant had discharged. Also, the appellant had paid necessary penalty and fine for violation of the said Rules in producing pouches of 8 gms/10 gms of unmanufactured tobacco bearing MRP of Rs. 5/- After discharging the duty for the whole month, the appellant filed abatement for closure of the factory from 10.12.2015 to 31.12.2015 in accordance with Rule 10 of the said Rules.
6. To examine the admissibility of the abatement claim, it is necessary to reproduce Rule 10 of the said Rules, which reads as under:
In case a factory did not produce the notified goods during any continuous period of fifteen days or more, the duty calculated on a proportionate basis shall be abated in respect of such period provided the manufacturer of such goods files an intimation to this effect with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, at least three working days prior to the commencement of said period, 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 the packing machines so sealed 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.
7. A Plain reading of the aforesaid Rule reveals that in the event the factory did not produce the notified goods for a continuous period of 15 days or more, the duty calculated on proportionate basis, shall be abated provided the manufacture of such goods files intimation to this effect to the Dept. at least before 3 working days from the commencement of the said period of closure. In the present case, there is no dispute of the fact that the in
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timation was filed on 4.12.2015 and the machines was sealed under the supervision of the Range Superintendent on 09/10.12.2015. Also, the other condition mentioned in the said Rule had been satisfied, so as to be eligible to claim abatement, for closure period. In my view, in absence of any other condition, rejecting the appellants claim of abatement of duty paid during the period of closure of the factory on proportionate basis, on the ground that 8 gms/10 gms the pouches with MRP of Rs. 5.00, manufactured on trial run but, without disclosing the same to the Dept., is untenable in law. Therefore, the impugned order is devoid of merit, accordingly set aside. Appeal is allowed with consequential relief, if any, as per law.