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CX – Abatement – Pan Masala/Zarda – When purpose for which condition was added in rule 10 is not defeated, an interpretation conducive to justice has to be given: CESTAT

2019-TIOL-2500-CESTAT-ALL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, ALLAHABAD

Appeal No. E/55897/2014-EX[DB]

Arising out of Order-in-Appeal No.GZB-EXCUS-000-APP-55-14-15, Dated: 17.09.2014
Passed by Commissioner(Appeals), Customs, Central Excise & Service Tax, Ghaziabad

Date of Hearing: 09.01.2019
Date of Decision: 09.01.2019

M/s TEEKAY FLAVOUR AND FRAGRANCE INDUSTRIES

Vs

COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX
GHAZIABAD

Appellant Rep by: Request for Adjournment
Respondent Rep by: Shri Mohd Altaf, Asstt. Commr AR

CORAM: Archana Wadhwa, Member (J)
Anil G Shakkarwar, Member (T)

CX -Compounded levy Scheme – Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 – The assessee is engaged in manufacture of Kamyab brand Pan Masala and Kamyab brand Zarda – At the request of assessee, the machines installed in their factory were sealed for period 11.09.2013 to 30.09.2013 for a period of twenty days – Accordingly in terms of the provisions of Rule 10 of said Rules, they applied for abatement of duty of Rs.8.00 Lakhs – The assessee’s claim of abatement stands denied only on the ground that they did not clear the earlier manufactured goods within a period of two days – Otherwise there is no dispute about the fact that the sealing done by the officers in terms of said Capacity Determination Rules continued for the period in question and no manufacturing activity was undertaken by them during the period of sealing – The assessee had taken a stand that the earlier manufactured goods could not be cleared within a period of two days as they were not having any buyers for the same – In the absence of any dispute that during the period of abatement, the assessee’s factory admittedly remained closed thus earning the abatement in terms of the said Rules and mere clearance of the earlier manufactured goods beyond the period of two days, by itself cannot be adopted for denial of the abatement – The lower authorities have relied upon various decisions laying down that exemption Notifications have to be strictly construed, but the status of various conditions of Notifications is required to be adjudged and interpreted in a justifiable manner – The condition of clearance of pre-manufactured goods within a period of two days of the closure of factory is meant for avoiding any misuse of facility given to the manufacturers as the goods in question are prone to evasion – However, when it is otherwise established and is not disputed by Revenue that the substantive condition of the Notification which is the sealing of machines and consequent closure of the factory stand satisfied, the clearance within two days being only a technical condition, has to be interpreted in a manner leading to justice to the assessee – The purpose for which such a condition was added by the legislature has to be kept in mind and when that purpose is not defeated, an interpretation conducive to justice has to be given – No reasons found to deny the abatement to the assessee – Accordingly, impugned orders are set aside: CESTAT

Appeal allowed

FINAL ORDER NO. 70035/2019

Per: Archana Wadhwa:

After denying the request for adjournment we proceed to decide the appeal itself inasmuch as a short issue is involved. Accordingly we have heard the learned A.R. appearing the Revenue and have gone through the impugned order.

2. As per facts on record the appellant is engaged in the manufacture of Kamyab brand Pan Masala and Kamyab brand Zarda. They were duly registered with the Central Excise department under the provisions of Compounded Levy Scheme, in terms of the provisions of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. At the request of the appellant the machines installed in their factory were sealed for the period 11.09.2013 to 30.09.2013 for a period of twenty days. Accordingly in terms of the provisions of Rule 10 of the said Rules, they applied for abatement of duty of Rs.8.00 Lakhs.

3. As per the Revenue, the machines undoubtedly remained sealed and no manufacture of notified goods was undertaken in their unit. However, the unit made clearances of notified goods manufactured prior to the period of closure. In terms of the Rules a manufacturer has to clear the goods manufactured prior to the closure period, within 2(two) days of the sealing. As such Revenue sought to deny the abatement on the said ground.

4. Accordingly proceedings were initiated against them resulting in passing of the Order-in-Original, upheld by Order-in-Appeal, rejecting their claim of abatement on the said sole ground. Hence the present appeal.

5. On going through the impugned orders we find that the appellant’s claim of abatement stands denied only on the ground that they did not clear the earlier manufactured goods within a period of two days. Otherwise there is no dispute about the fact that the sealing done by the officers in terms of the said Capacity Determination Rules continued for the period in question and no manufacturing activity was undertaken by them during the period of sealing. The appellants had taken a stand that the earlier manufactured goods could not be cleared within a period of two days as they were not having any buyers for the same. In the absence of any dispute that during the period of abatement, the assessee’s factory admittedly remained closed thus earning the abatement in terms of the said Rules and mere clearance of the earlier manufactured goods beyond the period of two days, by itself cannot be adopted for denial of the abatement. We note that the lower authorities have relied upon various decisions laying down that exemption Notifications have to be strictly construed, but we note that the status of the various conditions of the Notifications is required to be adjudged and interpreted in a justifiable manner. In our view the condition of clearance of pre-manufactured goods within a period of two days of the closure of the factory is meant for avoiding any misuse of the facility given to the manufacturers as the goods in question are prone to evasion. However, when it is otherwise established and is not disputed by the Revenue that the substantive condition of the Notification which is the sealing of the machines and consequent closure of the factory stand satisfied, the clearance within two days being only a technical condition, has to be interpreted in a manner leading to justice to the assessee. The purpose for which such a condition was added by the legislature has to be kept in mind and when that purpose is not defeated, an interpretation conducive to justice has to be given.

6. In view of our foregoing discussions we find no reasons to deny the abatement to the appellant. Accordingly impugned orders are set aside and appeal is allowed with consequential relief to the appellant.

(Dictated and pronounced in the open Court)

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