The Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad ruled that the manufacturer is entitled to refund of Central Excise duty for non-functioning machine.
Facts
The appellant are engaged in the manufacture of branded unmanufactured tobacco without lime tube having brand name “Suresh Tamaku” for retail sale price of Rs. 1.50 per pouch of 5gms, classified under Chapter sub-heading 2401 of Central Excise Tariff Act, 1985.
Since the product bearing brand name manufactured with the aid of packing machine and packed in pouches are notified goods under Section 3A of the Central Excise Act, 1944 and accordingly, the appellant was paying Central Excise duty as prescribed under Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010.
The dispute in this case arose when the appellant filed claim of abatement in the form of refund in terms of Rule of 10 of the said Rules, 2010 which were notified on account of non-production of notified goods i.e. branded and unmanufactured without lime tube for the continues period for 17 days thus the amount of Rs. 4,66,129/- was demanded by the appellant as refund of duty deposited by him in the beginning of the month on proportionate basis for the machines not working in 17 days in the month of May 2010.
On the receipt of refund claim from the appellant, the jurisdictional Assistant Commissioner issued show cause notice, saying that as per the provisions to Rule 10 it was mandatory for the appellant to get both the machines sealed so as to get the benefit of abatement of above referred Rules and since one machine was in working condition and therefore refund of duty deposited in advance was denied.
Submissions
Chartered Accountant, appearing for the appellant, contended that a close scrutiny of Rule 10 of the said Rules, 2010, if are made applicable prudently it clearly reveals that manufacturer is required to give an intimation to the proper Central Excise officer at least three working days prior to the commencement of the period for non functioning of the packing machines, intended to be sealed by the authorities so that the manufacturer is not able to run such machine.
Decision
The two member bench of Ramesh Nair Member (Judicial) and C L Mahar Member (Technical) noted that the only question which need to be answered is whether for the purpose of availing abatement under Rule 10 of the said Rules, 2010, the appellant statutorily need to stop manufacturing from both the machines which are installed in his factory.
The Tribunal said that any prudent person will reach to the conclusion that only machine which is working need to pay the required amount of compounded Central Excise duty and if any machine in a month is not working for more than 15 days, as per Rule the duty deposited in advance need to be abated in their favour.
The bench found that since one of the machines of the manufacturer was not engaged in the manufacture of notified goods for more than 15 days and therefore, it is clear that they are entitled for abatement of the duty which has been deposited by them in advance in the beginning of the month.
It was held by the Tribunal that since one machine of the appellant has not worked for 17 days in the month of May 2010, they are legally entitled for refund of the amount deposited by them in advance.
Case title: Suresh Tobacco Co v/s Commissioner of Central Excise & ST, Vadodara
Citation: EXCISE Appeal No. 24 of 2012-DB
