COMMISSIONER OF CENTRAL EXCISE Vs. PRAKASH PRODUCTS
LAWS(CE)-2015-1-111
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 07,2015

Appellant
VERSUS
Respondents

JUDGEMENT

Ramesh Nair, J. - (1.)THESE three appeals are directed against three orders passed by the Commissioner of Central Excise & Customs (Appeals), Nashik, as detailed below :-
The fact of the case is that the respondent filed refund claim of duty attributed to the period during which the factory was closed in terms of Notification No. , dated 1 -7 -2008. The respondent is engaged in the manufacture of "Gutkha" falling under Chapter Heading No. 2403 99 90 of the Central Excise Tariff Act and is entitled for the abatement if the unit is closed for a continuous period of 15 days or more. The original authority rejected the claim on the ground that the closure of the factory for 15 days or more is not in a particular calendar month and it is spilling over in two months. The respondent filed appeals before the Commissioner (Appeals) who allowed the refund vide three orders -in -appeal by allowing the appeals of the appellant except the refund for a continuous period of less than 15 days. Aggrieved with the impugned orders, the Revenue is before me.

(2.)SHRI N. Prabhu Desai, learned Superintendent (AR), appearing for the appellant (Revenue), submits that the abatement can only be granted when the unit is closed for a continuous period of 15 days or more in a particular calendar month. He submits that if in a particular month the closure period is less than 15 days, the assessee is not entitled for the abatement and consequential refund. It is his submission that in the Gutkha manufacturing unit, as per the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008, the duty is payable on monthly basis. He referred to Rules 7, 8, 9 and 16 of the said Rules. In view of the above Rules, it is inferred that in case of pan masala manufacturer under the special provisions when duty is payable on monthly basis, a continuous period of 15 days or more for the purpose of abatement should also be considered only when this period is falling in a particular month. Since in the present case, a continuous period of 15 days or more is spread into two or more months, it does not qualify for the abatement under the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 and, therefore, the respondent is not entitled for the consequential refund.
None appeared on behalf of the respondent.

(3.)I have carefully considered the submissions made by the learned AR and perused the record. The abatement is provided under Rule 10 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008, which is reproduced below :-
"10. Abatement in case of non -production of goods. -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 seven 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 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 goods shall be effected by the manufacturer:

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."

From the above Rule, it is seen that the abatement is provided in case the factory did not produce the notified goods during any continuous period of 15 days or more, the duty calculated on a proportionate basis shall be abated in respect of such period. In the said Rule there is no mention that the period of 15 days or more should fall under a particular calendar month. Therefore, as per the plain reading of this Rule, the only requirement is that the period of 15 days or more should be a continuous period. The contention of the Revenue is contrary to the plain language of Rule 10. The learned Commissioner (Appeals) has given elaborate findings interpreting Rule 10 which is reproduced below:-

"6. I have gone through the records of the case, submissions, both written and oral. The OIO is stated to have been received on 20 -7 -2009 and the appeal was filed on 9 -10 -2009. As per Section 35(1), the appeal is required to be filed within 60 days of the receipt of Order. As per proviso to the Section 35(1), the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within 60 days, allow it to be presented within a further period of thirty days. In the present case, the appeal was required to be filed within 60 days i.e. on or before 18 -9 -2009, but same is filed on 9 -10 -2009. Thus there was delay of 21 days. The appellant filed application for condonation of delay along with appeal stating that the delay is attributed to the sudden illness of relative in their hometown and no responsible person was available during the relevant time. This is appeal, against rejection of refund claim and no prudent person will unnecessary postpone filing of appeal as they will not gain anything by suspending filing of appeal. In fact in case of refund, they will suffer with interest due to delayed filing of appeal. The delay in appeal will naturally result in delayed refund, if they succeed. In present case being matter of refund, it cannot be said that the delay has happened on account of culpable negligence or on account of mala fides. The appellant has rightly relied on the Hon'ble Supreme Court's decision reported in : 1987 (28) E.L.T. 185 (S.C.). The said decision was followed by Hon'ble CESTAT in the case of Kuber Silk Mills Pvt. Ltd. v. CCE, Hyderabad reported at : 2001 (137) E.L.T. 951 (Tri. -Chennai). Following ratio of both the decisions, I condone the delay and proceed to decide the appeal on merit.

7. The issue involved in this case is whether continuous period of 15 days or more available for abatement of duty as per Rule 10 of said Rules is confined to a month only or it can spread over to the succeeding and/or preceding month. For case of reference, Rule 10 of said Rules is reproduced below: - -

RULE 10. Abatement in case of non -production of goods. - -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 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 goods shall be effected by the manufacturer:

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.

8. The words used in Rule 10 are "any continuous period of fifteen days or more." The word "any" used in rule makes it clear that 15 days period cannot be confined to a particular month. The rule does not say that "any continuous period" is restricted to a month. Therefore, it can be any period starting from any day in a month and ending on any day in the same or another month. On specific request made by the appellant, the Commissioner, Central Excise, Nashik vide letter F. No. V(Gen)27 -126/TB/08 -09/Pt.l dated 1 -4 -2009 has clarified that "any continuous period of 15 days or more" used in Rule 10 of said Rules, cannot be unduly restricted by interpreting that the continuous closure has to be confined within a month itself and cannot be spread over to the next month. This decision or order or clarification of Commissioner of Central Excise, Nashik has not been overruled by any authority so far. Under the circumstances, I hold that abatement cannot be denied on the ground that closure of the unit for "any continuous period of 15 days or more" travels from a month to next month.

9. Now coming to the closure period in the present case, it is seen that the unit was closed from 24 -1 -2009 to 2 -3 -2009 and from 14 -3 -2009 to 16 -4 -2009 and there has been no dispute about this closure period. The refund was rejected on the ground that, during the month of March 2009, the intimation was given on 4 -3 -2009 for closure of unit by sealing the packing machine on 14 -3 -2009 and that the number of days of closure after giving the intimation on 4 -3 -2009 are only 18 days from 14 -3 -2009 to 31 -3 -2009. The adjudicating authority has considered only one intimation of closure filed in March 2009 and ignored earlier intimation filed for closure. As against the earlier intimation given on 16 -1 -2009, the closure period started from 24 -1 -2009 and ended on 2 -3 -2009 which is a continuous period for more than 15 days. Though this period travels from January 2009 (24 -1 -2009) to March 2009 (2 -3 -2009), the abatement is admissible in terms of Rule 10 of said Rules. These facts relating to closure, opening and duty payment were certified by DC, CE, Nashik -III Division, Nashik vide letter F. No. NSK -III/PP/53/08, dated 22 -12 -2009.

10. Once it is concluded that the unit is entitled for abatement under Rule 10 of said Rules for aforesaid period, it is to decide whether the appellant is entitled for refund or otherwise. Appellant did not pay any duty for the month of February 2009, as the said month was covered by the closure period. Thus they are entitled for abatement for February 2009. However there is no case of refund for the month as no duty has been paid for the said month. Duty has been paid for the month of March 2009. The appellant is entitled for refund of duty for those closed days during the month of March 2009 for which abatement is admissible. Out of period of admissible abatement, the closure period during the month of March 2009 is 20 days i.e. from 1 -3 -2009 (2 days) and from 14 -3 -2009 to 31 -3 -2009 (18 days). I, therefore, hold that the unit has rightly filed the refund claim as they are entitled to it. However, DC has sanctioned refund only for 18 days of later period of the month and rejected refund for 2 days of beginning of the month, which is incorrect.

11. In view of above I allow the appeal with consequential relief and set aside the captioned OIO to the extent of rejection of refund claim for Rs. 80,646/ -."

I do not find any infirmity in the findings given by the Commissioner (Appeals). It was made absolutely in accordance with the provisions of Rule 10 and the same does not require any interference. Therefore, I am of the considered view that the impugned order is sustainable and the appeals filed by the Revenue are liable to be rejected. I, therefore, dismiss the appeals and uphold the orders of the learned Commissioner (Appeals).

(Dictated in Court)

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