The Tripura High Court held that the abatement of duty can not be withheld on mere failure of Superintendent of Central Excise to mention about a machine which was made un-operational.
The appellant assessee, Dharampal Satyapal Ltd. is a manufacturer of Jarda Scented Tobacco falling under Chapter 24 of the Central Excise Tariff Act, 1985. In terms of Section 3A of the Central Excise Act, 1944 read with Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 the assessee was liable to pay excise duty on the installed capacity of manufacture instead of actual manufacture and clearance of goods.
The appellant had installed one machine in its factory which was sealed and de-sealed at its request by the Excise authorities during the period between 31st August 2015 to 6th November 2015. According to the appellant, such machine was operated/not-operated during the said period
Since there was closure of production at the unit for continuous period on more occasions than one, the appellant filed a single abatement claim for the periods between 1st October 2015 to 7th October 2015 and 20th October 2015 to 31st October, 2015 under Rule 10 of the said Rules of 2010 and claimed that a total of Rs.50,32,548/- was admissible.
The Assistant Commissioner of Central Excise rejected the application by an order dated 1st January 2016 on two grounds namely, the closure of the production activity at the unit was not for a continuous period exceeding 15 days and that provisions of Rule 6(5) of the said Rules of 2010 were also not satisfied since the machine was not removed from the factory.
The Commissioner(Appeals) with respect to the assessee’s claim for abatement for the period between 1st October 2015 to 7th October 2015, he rejected the claim on the ground that “the machine was not un-installed and sealed in such a manner that it cannot be operated as evident from the sealing order dated 31st August, 2015.”
The division bench of head by the Chief Justice Akil Kureshi and Justice S.G.Chattopadhyay said that the proviso in such a case requires that the machine should be uninstalled and sealed by the Superintendent in such a manner that it cannot be operated. In the sealing order dated 31st August, 2015 that the Superintendent passed, he may not have used this expression that he had sealed the machine in such a manner that it cannot be operated. However, this would not be sufficient for the department to deny the benefit of abatement to the assessee in terms of Rule 10 of the said Rules.
“It was the duty of the Excise Superintendent to seal the machine and record it in the order that it was so sealed that it cannot be operated. In what manner the Superintendent passing an order after sealing the machine was not within the control of the assessee. Further, this machine was subsequently de-sealed at the request of the assessee, at which point there was no allegation that the seal was broken or that despite the seal the manufacturing activity was continued. The very purpose of sealing a machine is to keep it out of use and to render it inoperative,” the court said.
The court added, when the Superintendent of Central Excise thus sealed the machine and also passed an order to this effect, the presumption would arise that such sealing was in such a manner as that the same cannot be operated. In absence of any allegations by the department and any material on record suggesting that despite sealing the assessee operated the machine, it would not be permissible to withhold the abatement of duty only on the ground that the Superintendent of Central Excise did not draw proper proceedings and did not elaborately record that the sealing was done in such a manner that the machine could not be operated.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
