Refund of duty on account of permanent ban imposed by government.

PJ/CASE LAW/2015-16/2593

Case:-SHRI SIDDESHWAR TOBACCO PRODUCTS P. LTD. VERSUS C.C.E. & S.T., RAIPUR

Citation:- 2014 (310) E.L.T. 558 (Tri.-Del.)

Brief facts:- The appellant are manufacturer of pan masala containing tobacco called gutkha and they were discharging duty liability in terms of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. They had declared six operating machines and on this basis their monthly duty liability was Rs. 1,14,00,000/- which is paid in advance. In respect of July 2010, they had paid the duty of Rs. 1,14,00,000/- in advance. However, by the order dated 25-7-2012 of the Government of Chhattisgarh, the manufacture and sale of gutkha was banned with immediate effect. The appellant on 26-7-2012 intimated the Jurisdictional Assistant Commissioner with a copy to Jurisdictional Superintendent, Central Excise intimating him that the State Government has banned the manufacture and sale of gutkha in the State from 27-7-2012, that in the present scenario they are compelled to stop the manufacturing, activities and, therefore, they want to permanently discontinue the manufacturing of gutkha from 27-7-2012. Accordingly on 27-7-2012, in presence of Panchas the machines were sealed by the jurisdictional Central Excise officers. The appellant surrendered their registration certificates on 30th July, 2012. Since the machines had been sealed in the evening of 27th July, 2012 and, as such, they could not manufacture gutkha from 27-7-2012, the appellant filed a refund claim for an amount of Rs. 14,70,768/- in respect of the duty for the period from 28-7-2012 to 31-7-2012, as they had already paid the duty for the entire month of July, 2012 in advance. The refund claim was sanctioned by the Jurisdictional Assistant Commissioner vide order-in-original dated 25-10-2012. The refund claim was sanctioned on the basis of Rule 9 and 16 of the Pan Masala Packing Machines Rules. The Commissioner reviewed the above order of the Assistant Commissioner and directed him to file an appeal before the Commissioner (Appeals). The Commissioner (Appeals) vide order-in-appeal dated 10-9-2013 allowed the Revenue’s appeal and reversed the Assistant Commissioner’s order on the ground that “he finds that the appellant had intimated vide their letter dated 26-7-2012 for stopping of the production in the general practice, as they have already done as common practice for intimation of sealing of pouch packing machines and de-sealing for pouch packing machines many times and that the said intimation later does not reveal regarding permanent closure of production of the notified goods of the existing retail price”.It is on this basis that the Commissioner (Appeals) held that sanction of the refund under the provisions of Rule 9 read with Rule 16 of the Pan Masala Packing Machines Rules is not admissible. Against this order of the Commissioner (Appeals), this appeal has been filed along with stay application as the amount has already been paid to the appellant and in view of the Commissioner (Appeals)’s order, the same has become recoverable.

Appellants Contention:-Shri Manish Saharan, Advocate, the learned Counsel for the appellant, pleaded that the refund claim has been sanctioned under Rule 9 and 16 of Pan Masala Packing Machines Rules, that as is clear from the appellant’s letter dated 26-7-2012 that the appellant had stopped the production permanently on account of ban on manufacture and sale of gutkha and pan masala imposed by the State Government of Chattisgarh, that the fact of permanent closure of the machines had been clearly intimated by the appellant in their letter dated 26-7-2012, that the machines had been sealed by the Central Excise officers in presence of Panchas in the evening of 27-7-2012, that in view of this, the appellant are eligible for refund of duty for the period from 28-7-2012 to 31-7-2012, and that the ground on which the refund has been held as inadmissible is totally incorrect, as the letter dated 26-7-2012 submitted by the assessee clearly mentions that they had intimate the Central Excise authorities about permanent closure of the factory because of ban on manufacture and sale of gutkha and pan masala. He, therefore, pleaded that the impugned order is not correct, that the appellant have a strong prima facie case in their favour, and hence, the requirement of pre-deposit of Cenvat credit demand, interest and penalty may be waived for hearing of the appeal and recovery thereof may be stayed.

Respondents Contention:-Shri M.S. Negi, the learned DR, opposed the stay application by reiterating the findings of the Commissioner (Appeals) in the impugned order and pleaded that since the appellant had surrendered the license on 30th July, 2012, the refund has been correctly denied.

Reasoning of judgement:-The tribunal have considered the submissions from both the sides and perused the records. On going through the letter dated 26-7-2012 of the appellant addressed to the Assistant Commissioner with a copy endorsed to the Range Superintendent, it is seen that the appellant clearly informed the Assistant Commissioner that in view of the ban on manufacture and sale of gutkha and pan masala imposed by the State Government with effect from 27-7-2012 they are compelled to stop their manufacturing activities and for this reason they wish to permanently discontinue the manufacture of gutkha from 27-7-2012. There is no dispute that all the machines were sealed in the evening of 27-7-2012 in the presence of Panchas and hence there could not be manufacture of any gutkha from 28-7-2012 onwards. Rule 16 of the Pan Masala Packing Machines Rules provides that when a manufacturer permanently ceases to work in respect of all the machines installed in the factory and who has filed an intimation for surrender of registration with the Deputy Commissioner/Assistant Commissioner of the Central Excise, as the case may be, with a copy to the Superintendent of Central Excise for this purpose, the duty payable by him for the month shall be calculated pro-rata on the basis of the total number of days in the said month and total number of days before the date of receipt of the said intimation with the Deputy Commissioner/Assistant Commissioner of Central Excise, and the duty paid for the month in accordance with the notification shall be adjusted towards the duty so calculated and on such adjustment, if there is any excess payment, it shall be refunded to the manufacturer by 20th day of the following month and deficiency, if any, shall be payable by him by the 5th of the following month. Prima facie, the tribunal find that the Assistant Commissioner has refunded the disputed amount strictly in accordance with Rule 16 of the Pan Masala Packing Machines Rules, the tribunal is therefore of prima facie view that this rule is applicable in the circumstances of this case. The ground on which the Commissioner (Appeals) has reversed the Assistant Commissioner’s order sanctioning the refund is factually incorrect as from the Appellant’s letter to the Assistant Commissioner it is absolutely clear that the appellant wanted to stop the manufacture of gutkha permanently in view of ban on its manufacture and sale. In view of this, the appellant have a strong prima facie case in their favour. The requirement of pre-deposit of the disputed amount of refund is waived for hearing of the appeal and recovery thereof stayed. The stay application is allowed.

Decision:-The stay application is allowed.

Comment:- The crux of the case is that as the assessee is the manufacture of pan masala containing tobacco which was permanently banned by the state govt. w.e.f. 27.07.2012, they were entitled for refund of excess duty paid by them. The assessee had also filed an intimation with the Assistant and Deputy commissioner of Central Excise that due to permanent ban imposed by the State Government, they have closed their factory and the machines were also sealed by the Excise officers. Accordingly, prima facie it was found that there was no infirmity in the order in original granting refund to the assessee and stay application was allowed.
Prepared by:- Neelam Jain

Comments

PJ/CASE LAW/2015-16/2593

Post a Comment

Query