Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2593

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

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

 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com