# Commissioner of Central Excise, Kanpur v. M/s Trimurti Fragrances Pvt. Ltd, Kanpur

- **Citation:** (2019) 4 ILRA 788
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-10-23
- **Case number:** Central Excise Appeal No. 16 of 2017
- **Bench:** Bharati Sapru, Rohit Ranjan Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/commissioner-of-central-excise-kanpur-v-m-s-trimurti-fragrances-pvt-ltd-kanpur-44949
- **Pages:** 10

## Headnote

A. Tax Law - Central Excise Act, 1944:
Sections 3-A, 35-G; Pan Masala Packing
Machines (Capacity Determination and
Collection of Duty), Rules, 2008: Rules 7,
8, 9, 10 - The assessee is entitled to
abatement of duty, in the event of
closure of factory for continuous period
of 15 days or more, without first
depositing the duty in terms of Rule 10.
Provided, the assessee complies with the
statutory requirement. (Para 22, 23, 25)

When the rules do not provide for the manner
in which duty is required to be abated, nor do
they provide that abatement shall be by an
order of the Commissioner or any authority,
but nonetheless provide for abatement of duty
and extent of entitlement to such abatement,
the action of assessee in suo moto taking the
benefit of abatement is not contrary to the
statutory
scheme,
if
he
has
correctly
calculated the proportion of duty and set off
the same against the duty payable for the next
month. (Para 19, 20)

Central Excise Appeal dismissed. (E-4)

Precedent followed:

## Text

788 INDIAN LAW REPORTS ALLAHABAD SERIES

80. In the light of the above
discussion,
we
conclude
that
the
declaration dated 11.05.2012 made under
Section 6 of the Act is beyond time as
prescribed by proviso (ii) to Section 6(1)
of the Act and is a nullity and as the
objections filed by the tenure holders
under Section 5A of the Act were not
dealt with by the Competent Authority
their rejection is without jurisdiction and
on that basis no report or recommendation
could have been made for issuing the
declaration under Section 6 of the Act.

81. Accordingly, on both the counts
the petition succeeds and the declaration
dated 11.05.2012 issued under Section 6
of the Act is quashed, in so far as the
petitioners or their heirs and legal
representatives are concerned.

82. The writ petition is allowed with
no order as to costs.
----------
(2019)12 ILR A788

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 23.10.2019

BEFORE
THE HON'BLE BHARATI SAPRU, J.
THE HON'BLE ROHIT RANJAN AGARWAL, J.

Central Excise Appeal No. 16 of 2017
connected with
Central Excise Appeal No. 92 of 2017

Commissioner of Central Excise, Kanpur
 ...Appellant
Versus
M/s Trimurti Fragrances Pvt. Ltd, Kanpur
 ...Respondent
Counsel for the Appellant:
Sri Parv Agarwal

Counsel for the Respondent:
Sri Nishant Mishra, Sri Prashant Shukla,
Sri Salig Ram Agrawal

A. Tax Law - Central Excise Act, 1944:
Sections 3-A, 35-G; Pan Masala Packing
Machines (Capacity Determination and
Collection of Duty), Rules, 2008: Rules 7,
8, 9, 10 - The assessee is entitled to
abatement of duty, in the event of
closure of factory for continuous period
of 15 days or more, without first
depositing the duty in terms of Rule 10.
Provided, the assessee complies with the
statutory requirement. (Para 22, 23, 25)

When the rules do not provide for the manner
in which duty is required to be abated, nor do
they provide that abatement shall be by an
order of the Commissioner or any authority,
but nonetheless provide for abatement of duty
and extent of entitlement to such abatement,
the action of assessee in suo moto taking the
benefit of abatement is not contrary to the
statutory
scheme,
if
he
has
correctly
calculated the proportion of duty and set off
the same against the duty payable for the next
month. (Para 19, 20)

Central Excise Appeal dismissed. (E-4)

Precedent followed:
1. Commissioner Vs. Thakkar tobacco Products
Pvt. Ltd., 2016 (332) E.L.T. 785 (Gujarat)
(Para 19, 22, 24, 25)

Notifications/Circulars:
1.
Circular
No.
1063/2/2018-CX
dated
16.02.2018, issued by Ministry of Finance
(Department of Revenue) Central Board of
Excise and Customs, New Delhi
Present appeal is against order dated
07.06.2016, passed by Customs, Excise
and Service Tax Appellate Tribunal,
Allahabad bench.

(Delivered by Hon'ble Rohit Ranjan
Agarwal,J.)

1. These two appeals filed under
Section 35-G of the Central Excise Act,
1944 arise against the order of the
4 All. Commissioner of Central Excise, Kanpur Vs. M/s Trimurti Fragrances Pvt. Ltd., Kanpur
789
Customs,
Excise
and
Service
Tax
Appellate
Tribunal,
Allahabad
(hereinafter called as "CESTAT"), dated
7.6.2016. As the issue in both the appeals
are same, hence they are heard and
decided together.

2. Appeal No.16 of 2017 was
admitted on 23.5.2019 on the following
questions of law:

"(i)
Whether
the
Hon'ble
CESTAT has erred in not taking the
cognizance of the provision of Rule 7 and
Rule 9 of Pan Masala Packing Machines
(Capacity Determination and Collection
of Duty), Rules, 2008 which provides
that:

Rule 7. Duty payable to be
calculated. -

The
duty
payable
for
a
particular month shall be calculated by
application of the appropriate rate of duty
specified in the notification of the
Government of India in the Ministry of
Finance (Department of Revenue), No.42/
2008-CE, dated the 1st July, 2008 to the
number of operating packing machines in
the factory during the month.

Rule 9. Manner of payment of
duty and interest.-

The monthly duty payable on
notified goods shall be paid by the 5th day
of same month and an intimation in Form
- 2 shall be filed with the Jurisdictional
Superintendent of Central Excise before
the 10th day of the same month:

Provided that monthly duty
payable for the month of July, 2008 shall
be paid on or before 15th day of July,
2008:

Provided further that if the
manufacturer fails to pay the amount of
duty by due date, he shall be liable to pay
the outstanding amount along with the
interest at the rate specified by the Central
Government
vide
notification
under
section 11AB of the Act on the
outstanding amount, for the period
starting with the first day after due date
till the date of actual payment of the
outstanding amount:

Provided also that in case of
increase in the number of operating
packing machines in the factory during
the month on account of addition or
installation of packing machines, the
differential duty amount, if any, shall be
paid by the 5th day of the following
month:

Provided also that in case a
manufacturer permanently discontinues
manufacturing of goods of existing retail
sale price or commences manufacturing
of goods of a new retail sale price during
the month, the monthly duty payable shall
be recalculated pro-rata on the basis of the
total number of days in that month and the
number of days remaining in that month
counting
from
the
date
of
such
discontinuation or commencement and the
duty liability for the month shall not be
discharged unless the differential duty is
paid by the 5th day of the following
month and in case the amount of duty so
recalculated is less than the duty paid for
the month, the balance shall be refunded
to the manufacturer by the 20th day of the
following month:

Provided also that if there is
revision in the rate of duty, the monthly
duty payable shall be recalculated pro-rata
on the basis of the total number of days in
that month and the number of days
remaining in that month counting from
the date of such revision and the duty
liability for the month shall not be
discharged unless the differential duty is
paid by the 5th day of the following
790 INDIAN LAW REPORTS ALLAHABAD SERIES
month and in case the amount of duty so
recalculated is less than the duty paid for
the month, the balance shall be refunded
to the manufacturer by the 20th day of the
following month:

Provided also that in case it is
found
that
a
manufacturer
has
manufactured goods of those retail sale
prices, which have not been declared by
him in accordance with provisions of
these rules or has manufactured goods in
contravention of his declaration regarding
the plan or details of the part or section of
the factory premises intended to be used
by him for manufacture of notified goods
of different retail sale prices and the
number of machines intended to be used
by him in each of such part or section, the
rate of duty applicable to goods of highest
retail sale price so manufactured by him
shall be payable in respect of all the
packing machines operated by him for the
period during which such manufacturing
took place:

Provided also that in case a
manufacturer does not pay the duty
payable by the due date, and continues to
operate any packing machine, then till the
time such non-payment continues, he
shall be liable to pay the monthly duty
based on the number of operating packing
machines declared in the month for which
duty was last paid by him or the total
number of packing machines found
available in
his premises at any time thereafter,
whichever is higher:

Provided also that in case a
new manufacturer commences production
of notified goods in a particular month,
his monthly duty payable for that month
shall be calculated pro-rata on the basis of
the total number of days in the month and
the number of days remaining in that
month
starting
from
the
date
of
commencement of the production of such
notified goods and shall be paid within
five days of such commencement.

(ii)
Whether
the
Hon'ble
CESTAT
has
erred
in
not
taking
cognizance that neither the party is a new
manufacturer nor they have changed their
Retail Sale Price (RSP) of 05 machines,
which were used for the manufacture of
Gutkha of MRP of Rs.2.00 during the
month of November, 2012.

During the month of November,
2012, the parety operated the following
machines for 12 days (i.e. 19.11.2012 to
30.11.2012)

- 06 Pouch Packing Machines of
Gutkha of MRP Rs.1.00; and

- 05 Pouch Packing Machines of
Gutkha of MRP Rs. 2.00.

As per Notification No. 42/
2008-CE, dated the 1st July 2008 read
with Rule 7 of the Pan Masala Packing
Machines (Capacity Determination and
Collection of Duty) Rules, 2008, during
the month of November-2012, the rate of
duty per machine per month for Pouch of
MRP. 1.00 was Rs. 19 lakhs and for
Pouch of MRP Rs. 2.00 was Rs. 36 lacs.

It is stipulated under proviso 4
of Rule 9 of the Pan Masala Rules, 2008
that
if
a
manufacturer
commences
manufacturing of goods of a new retail
sale price during the month, the monthly
duty payable shall be recalculated pro-rata
on the basis of the total number of days in
that month and the number of days
remaining in that month counting from
the date of such commencement and the
duty liability for the month shall not be
discharged unless the differential duty is
paid by the 5th day of the following
month. Therefore, in view of the above
proviso 4 of Rule 9 of the Pan Masala
Rules, 2008, applicable for computation
4 All. Commissioner of Central Excise, Kanpur Vs. M/s Trimurti Fragrances Pvt. Ltd., Kanpur
791
of their duty liability for the month of
November, 2012 as under:-

- the party was required to pay
the Central Excise duty on pro-rata basis
for total 12 days (from 19.11.2012 to
30.11.2012)
on
06
pouch
packing
machines of MRP Rs. 1.00 that remained
operative during the said period, which
comes to Rs.45,60,000/- @ 19.00 lakhs
per machine per month and this duty was
to be paid by the 5th day of the following
month [i.e. 5th December, 2012], as the
pouches of MRP Rs. 1.00 was new retail
price for the said party.

- the party was required to pay
full duty on 05 machines used for the
manufacture of Gutkha of MRP Rs. 2.00,
which works out to Rs. 1,80,00,000/- @
Rs.36.00 lakhs per machine per month
and this duty was to be paid by 5th of the
same month, as the pouches of MRP Rs.
2.00 was not a new retail price for the
party.

- thus, the total duty liability of
the party for the month of November,
2012 works out to Rs. 2,25,60,000/- [Rs.
45,60,000/- of Gutkha MRP Rs. 1.00 on
06 machines + Rs. 1,80,00,000/- of
Gutkha MRP Rs. 2.00 on 05 machines] as
per the provisions of Pan Masala Rules,
2008 but the party paid Rs. 1,17,60,000/-
only for the month of November, 2012
which resulted into short payment of Rs.
1,08,00,000/- for the month of November-
2012.

(iii) When the Apex Court in the
case of M/s Madhumilan Syntax Ltd vs
Union of India- 2007(210) ELT 484 (SC),
the Apex Court held that once a statute
requires to pay tax and stipulates period
within which such payment is to be made,
the payment must be made within that
period.

(iv) When the Apex Court in the
case of State of Jharkhand & Others vs.
Ambey Cement & Anr. [ 2004(178) ELT
055(SC)], has held that it is a cardinal rule
of the interpretation that where a statute
provides that a particular thing should be
done, it should be done in the manner
prescribed and not in any other way.

(v) When the judgment of the
Hon'ble High Court, Delhi relied on by
the CESTAT in the instant case in the
case of CCE vs. Shakti Fragrances Pvt.
Ltd. [2015(324) E.L.T. 390] does not
appear to be identical to the instant case.

(vi) Whether, in view of the
provisions of Rule 7 & 9 of Pan Masala
Packing
Machines
(Capacity
Determination and Collection of Duty),
Rule, 2008 and aforementioned rulings by
Apex Court, the confirmation of demand
& recovery of the short paid duty
amounting to Rs.1,08,00,000/- for the
month of November, 2012 alongwith
interest and penalties should have been
upheld by the Hon'ble CESTAT?

3. On 19.9.2019, learned counsel for
the appellant was permitted to add the
following substantial question of law,
which reads as under:

"1). Whether in view of the
provisions of Rule 9 and Rule 10 of the
Pan Masala Packing Machine (Capacity
Determination and Collection of Duty)
Rules 2008, the manufacture is required
to pay the duty for the whole month and
thereafter seek rebate for non working
days or the manufacture can suo moto
take the benefit of abatement by not
depositing the duty for non working days
?"

5. Brief facts of the case are, that
respondent-assessee is a registered dealer
and is paying duty on manufacture of Pan
Masala
containing
tobacco
(Gutkha)
792 INDIAN LAW REPORTS ALLAHABAD SERIES
under the Central Excise Tariff Act, 1985.
Respondent-assessee
on
13.9.2012
intimated the Department intending to
start
commercial
production
w.e.f.
12.9.2012 and requested for unsealing of
11 machines to manufacture Gutkha. 7
machines for manufacture of Gutkha of
MRP Rs.2.00 and on 4 machines for
manufacture of Gutkha of MRP Rs.1.50.

6. In the month of September, 2012,
assessee intimated the Department that it
will stop production/clearance
w.e.f.
6.10.2012 and the Department pursuant
thereto sealed the machines in the
midnight of 5.10.2012.

7. On 5.10.2012, assessee paid
central excise duty of Rs.3,68,000/- for
the month of October, 2012 as there were
11 machines installed in the factory

8. Since production was closed for
26 days in the month of October, assessee
applied for abatement of Rs.3,08,64,516/-
which was granted by the Assistant
Commissioner
on
29.11.2012,
who
allowed the said amount to be adjusted
while discharging duty for subsequent
month.

9. The assessee on 12.11.2012
informed the Assistant Commissioner
intending to start production of Gutkha of
MRP Rs.1.00 on 6 machines and Gutkha
of MRP Rs.2.00 on 5 pouches packing
machine
from
19.11.2012.
On
16.11.2013, the Assistant Commissioner
directed Superintendent, Central Excise to
unseal and install the 11 machines in the
midnight of 18.11.2012. The assessee
started manufacture of pouches of Gutkha
of MRP Rs.1.00 and MRP Rs.2.00 from
19.11.2012. The assessee calculated that
he was liable to pay excise duty of
Rs.1,17,60,000/- on pro-rata basis for 12
days, i.e., from 19.11.2012 to 31.11.2012
(duty
of
Rs.45,60,000/-
and
Rs.72,00,000/-) on Gutkha MRP Rs.1.00
and MRP Rs.2.00 respectively.

10. After adjusting Rs.1,17,60,000/-
from
abatement
of
Rs.3,08,64,516/-,
sanctioned earlier on 29.11.2012, an
amount of Rs.1,91,04,516/- remained
from the abated amount. The assessee
informed the Department of the payment
by way of adjustment on 6.12.2012 by
submitting Form-2.

11. The Department was of the
opinion
that
assessee
started
manufacturing Gutkha on new retail price,
i.e., MRP of Rs.1.00 during November,
2012, hence, duty on the same was
payable on pro-rata basis, but, since
Gutkha of MRP Rs.2.00 was not a new
retail price, hence duty on the same was
payable for the entire month and not for a
period of 12 days provided under Rule 10
of the Pan Masala Packing Machines
(Capacity Determination and Collection
of Duty), Rules, 2008 (hereinafter called
as
"PMPM
Rules,
2008").
The
Superintendent, Central Excise through
letters dated 4.3.2013 and 12.3.2013
required the assessee to deposit the central
excise duty of Rs.1,08,00,000/-. The said
letters were replied by assessee, but a
show cause
notice
was issued on
25.9.2013 proposing for recovery of
excise duty of Rs.1,08,00,000/- along
with interest and penalty. The said show
cause
notice
was
adjudicated
by
Commissioner vide order dated 29.9.2014
confirming the proposed duty along with
interest and equal amount of penalty
under Rule 17 of PMPM Rules, 2008 read
with Section 11AC of the Central Excise
Act. Further, penalty of Rs.5000/- was
imposed under Rule 27 of the Central
4 All. Commissioner of Central Excise, Kanpur Vs. M/s Trimurti Fragrances Pvt. Ltd., Kanpur
793
Excise Rules, 2002 for contravening Rule
12 of the Central Excise Rules, 2002 read
with Rules 7 and 9 of the PMPM Rules,
2008.

12. Aggrieved by the said order,
assessee
filed
an
appeal
No.E/50211/2015(DB), and against the
order dated 30.9.2014 passed by the
Commissioner of Central Excise and
Service
Tax,
Kanpur,
Appeal
No.E/50222/2015/EX(DB)
before
CESTAT. On 7.6.2016, CESTAT while
deciding
the
Appeal
No.E/50211/
2015(DB) set aside the order passed by
Commissioner Central Excise and Service
Tax holding it to be bad and against the
provisions of Section 3-A of the Act read
with Rules, 7, 8, 9 and 10 of the PMPM
Rules, 2008. Similarly, on 10.8.2016 the
other appeal of the assessee was also
allowed
and
the
order
of
the
Commissioner Central Excise and Service
Tax was set aside.

13. Sri Parv Agarwal, learned
counsel appearing for the Department,
submitted that assessee on 12.11.2012 had
submitted a letter declaring that w.e.f.
19.11.2012 the assessee is going to start
production of notified goods, i.e., Gutkha
of MRP Rs.1.00 with the aid of 6 pouches
packing machine and Gutkha of MRP
Rs.2.00 with the aid of 5 pouches of
packing machine. It is submitted that
assessee is neither a new manufacturer
nor has changed the retail price of 5
machines,
which
were
used
for
manufacture of Gutkha of MRP Rs.2.00
during the month of November, 2012.
Thus, as per proviso 4 of Rule 9 of the
PMPM
Rules,
2008
applicable
for
computation of excise duty is liable for
the relevant month. He further submitted
that the assessee was required to pay
excise duty on pro-rata basis for 12 days
on 6 pouches packing machines of MRP
Rs.1.00 that remained operative during
the
said
period,
which
comes
to
Rs.45,60,000/- @ Rs.19,00,000/- per
machine, per month and the same was to
be paid by 5th day of the following month
(i.e. 5th December, 2012), as the pouches
of MRP Rs.1.00 was new retail price of
the assessee. Further, the assessee was
required to pay full excise duty on 5
machines,
which
were
used
for
manufacture of Gutkha of MRP Rs.2.00,
which works out to Rs.1,80,00,000/- @
Rs.36,00,000/- per machine, per month
and this was to be paid by 5th day of the
same month as the MRP Rs.2.00 was not
a new retail price for the party. According
to him total excise duty liability for the
month
of
November,
2012
was
Rs.2,25,60,000/- but the assessee had paid
only Rs.1,17,60,000/- and there was a
short fall of Rs.1,08,00,000/-.

14. Learned counsel for the
Department further submitted that Rule
10 of PMPM Rules,2008 provides for
abatement in the case of non-production
of notified goods and abatement is subject
to condition stipulated therein and the
assessee cannot on his own calculate the
excise duty and set off the same against
the duty payable under Rule 9 of the
PMPM Rules, 2008.

15. Sri Agarwal submitted, that
settled principle of law is that once the
statute requires to pay tax within
stipulated period then such payment is to
be made within that period, otherwise it
would render the provision redundant and
nugatory.

16. Replying the averments made by
counsel for the Department, Sri Nishant
794 INDIAN LAW REPORTS ALLAHABAD SERIES
Mishra, learned counsel appearing for the
respondent-assessee submitted that subsection 3 of Section 3-A of the Central
Excise Act provides that if a factory
producing notified goods did not produce
the same during any continuous period of
15 days or more, duty calculated on
proportionate basis shall be abated in
respect of such period, subject to
conditions as may be prescribed.

17. Rule 10 of the PMPM Rules,
2008 provides condition for abatement,
i.e. if a manufacturer files intimation with
the Deputy/Assistant Commissioner with
a copy to Superintendent at least three
working days prior to commencement of
such period. According to him, in the
present case, conditions prescribed under
Rule 10 were complied and assessee had
intimated the Assistant Commissioner on
25.9.2012
regarding
stoppage
of
production from 6.10.2012 and again by
letter dated 12.11.2012 regarding starting
of production from 19.11.2012.

18. Sri Mishra submitted that
intimation as required under Rule 10 was
given by the assessee. Thus, he was
entitled to abatement in terms of Rule 10
of the PMPM Rules, 2008 in respect of
Gutkha of MRP Rs.2.00. He further
submitted that provision to Rule 9 cannot
be interpreted in a manner so as to levy
duty in circumstances, specifically barred
by the parent statute, i.e., proviso to
Section 3A of the Act.

19. Sri Nishant Mishra, relied upon
a judgment of the Gujrat High Court in
the case of Commissioner vs. Thakkar
tobacco
Products
Pvt.
Ltd.
2016
(332)E.L.T. 785 (Gujarat) wherein the
same issued was under consideration and
was decided in favour of the assessee.
Relevant paragraph nos.12, 13, 14 and 15
of the said judgment are extracted
hereunder:-

"12. In the above backdrop, the
merits of the impugned order may be
examined. The Tribunal, in the impugned
order, has recorded that in none of the
orders impugned before it, it is in dispute
that there was a closure of the factory for
more than fifteen days and the required
procedure of due intimation of closure,
sealing and due intimation or reopening
was followed. Thus, there was no dispute
that the requirements of rule 10 of the
PMPM Rules had been fulfilled. There
was also no dispute that the amount
adjusted was not more than the amount of
duty mandated to be abated in terms of
rule 10 of the PMPM Rules. The Tribunal
has taken note of the fact that rule 10 of
the PMPM Rules does not make any
stipulation about abatement having to be
claimed by filing an application, though it
also does not imply to the contrary.
Referring to rule 9 of the PMPM Rules, it
was observed that when the intention of
the Government is that the amount is to be
refunded and an express provision is
provided therefor, whereas rule 10 does
not make any such provision. It may be
noted that insofar as rule 96ZO of the
Central Excise Rules is concerned, subrule (2) thereof expressly provides for
claim of abatement being made under
sub-section (3) of section 3A of the Act,
which would be allowed by an order
passed by the Commissioner of Central
Excise of such amount as may be
specified in such order. Similarly, subrule (7) of rule 96ZQ provides for
abatement being allowed by an order
passed by the Commissioner of Central
Excise of such amount as may be
specified in such order, subject to the
conditions
enumerated
thereunder.
4 All. Commissioner of Central Excise, Kanpur Vs. M/s Trimurti Fragrances Pvt. Ltd., Kanpur
795
Similarly, sub-rule (2) of rule 96ZP
provides for abatement being allowed by
an order passed by a Commissioner of
Central Excise of such amount as may be
specified in such order subject to the
fulfillment of the conditions laid down
thereunder.
Thus,
in
relation
to
independent processors of textile fabrics,
manufacturers of non-alloy steel hot rerolled products and manufacturers of nonalloy steel ingots, who were also assessed
on the basis of annual production capacity
under section 3A of the Act, there was an
express provision for making an order of
abatement whereas the PMPM Rules are
totally silent in that regard. There is no
provision for making an order of
abatement under rule 10 of the PMPM
Rules.

13. As noticed earlier, rule 10 of
the PMPM Rules provides for abatement
of duty calculated on proportionate basis
in case where the factory does not
produce
notified
goods
during
any
continuous period of fifteen days or more.
However, such abatement is subject to the
conditions
stipulated
thereunder
as
referred to hereinabove. Once such
conditions are satisfied, the assessee
becomes entitled to abatement of duty to
the extent of the days the factory did not
produce the notified goods.

14. On a plain reading of rule 10
of the PMPM Rules, it is apparent that
while the same provides that duty
calculated on a proportionate basis shall
be abated, it does not provide for any
procedure for doing so. Thus, whereas
rules 96ZQ, 96ZO and 96ZP of the
Central Excise Rules, 1944, which also
are schemes under the compounded levy
scheme, there were express provisions for
making an order of abatement by the
Commissioner, rule 10 of the PMPM
Rules is wholly silent in that regard.
Under the circumstances, having regard to
the fact that rules 96ZQ, 96ZP and 96ZO
provided
for
making
an
order
of
abatement,
however,
there
is
no
corresponding provision in the PMPM
Rules, it can be inferred that the rule
making authority has consciously omitted
making such provision. Therefore, in the
absence of any specific provision for
making an order of abatement, it cannot
be said that the action of the assessee in
calculating the duty on a proportionate
basis and setting off the same against the
duty payable in the succeeding month is,
in any manner, violative of the rules or
the statutory scheme.

15. Besides, in the light of the
findings recorded by the Tribunal to the
effect that it is not disputed that the
adjustments made were not more than the
amounts of duties mandated to be abated
as per rule 10 of the PMPM Rules, the
action of the respondent assessee in
computing the proportionate amount of
duty towards the abatement and setting it
off against the duty payable in the next
month does not adversely affect the
revenue in any manner. The abatement, in
the opinion of this court, is not akin to
refund and means reduction or diminution
of the duty. Therefore, when the duty
stands reduced to the extent provided in
the rule, there is no liability to pay the
same, inasmuch as, to that extent the duty
stands abated. Therefore, if the assessee
has correctly calculated the proportion of
duty and set off the same against the duty
payable for the next month, it cannot be
said that the said action is contrary to the
statutory scheme. When the rules do not
provide for the manner in which duty is
required to be abated, nor do they provide
that abatement shall be by an order of the
Commissioner or any authority, but
nonetheless provide for abatement of duty
796 INDIAN LAW REPORTS ALLAHABAD SERIES
and the extent of entitlement to such
abatement, no fault can be found in the
approach of the assessee in suo motu
taking the benefit of such abatement."

20. Sri Mishra also placed reliance
upon circular issued by the Ministry of
Finance (Department of Revenue) Central
Board and Excise & Customs, New Delhi
dated 16.2.2016 wherein the Department
has accepted the judgment of the High
Court of Gujarat in case of M/s Thakkar
Tobacco (supra). Relevant portion of the
circular
No.1063/2/2018-CX
dated
16.2.2018 is extracted hereunder:

"7.1 Department has accepted
the aforementioned order of the Hon'ble
High Court of Gujarat where the Hon'ble
Court dismissed the departmental appeal
on
the
question
of
law,
whether
manufacturer has the option of suo-moto
abatement of duty in the event of closure
of factory for a continuous period of 15
days or more without first depositing the
duty in terms of rule 10 of Pan Masala
Packing
Machines
(Capacity
Determination and Collection of Duty)
Rules, 2008, on the following grounds,

a) As per provisions of the
Central Excise Act, 1944 and the PMPM
Rules abatement is to be granted and the
statute does not prescribe any order of
abatement to be passed by the any
authority such as DC/AC.

b) In the erstwhile Central
Excise Rules, 1944, there was an express
provision which provides for claim of
abatement would be allowed by an order
passed by the Commissioner of Central
Excise. When the intention of the
government is that amount is to be
refunded in as specific manner, then an
express provision is provided. However
the impugned rule does not make any
such provision.

c) The Board Instruction from
F.No.267/16/2009-CX-8
dated
12.03.2009 is not applicable in the present
case as Rule of PMPM rules does not
speak of any order of abatement."

21. We have heard learned counsel
for the parties and perused the materials
on record.

22.

The
sole
issue
under
consideration is as to giving benefit of
abatement for non-production, whether
the assessee could on their own calculate
excise duty and set off the same against
the duty payable in the next month. The
argument of the Department relying upon
Rule 9 of the PMPM Rules, 2008
claiming that the monthly duty on notified
goods is to be paid by 5th day of the
month and the assessee cannot simpliciter
claim set off without first depositing the
same had been repelled by the Gujarat
High Court in the case of Thakker
Tobacco (supra) holding that Rule 10 of
the PMPM Rules, 2008 envisages a
situation and provides for abatement of
excise duty calculated on proportionate
basis, in case where factory does not
produces
notified
goods
during
continuous period of 15 days or more.

23. Moreover, the statue, that is
proviso to Sub-section (2) of Section 3A
itself provides for abatement where a
factory producing notified goods did not
produce the same during any continuous
period of 15 days or more, the duty
calculated on the proportionate basis shall
be abated in respect of such period, if the
manufacturer of such goods fulfills such
condition as may be prescribed. In the
present case as the assessee having
4 All. Commissioner, Central Goods & Services Tax Commissionerage, Ghaziabad Vs. M/S International Tobacco Co. Ltd.
797
complied the statutory requirement, is
entitled to the benefit claimed by him.

24. The judgment in case of Thakker
Tobacco (supra) having been accepted by
the C.B.D.T. in its circular dated
16.2.2018, the controversy does not
remain any longer as the matter is not res
integra any more.

25. In view of the above, we are of the
considered
opinion
that
once
the
Department has accepted the judgment in
case of Thakker Tobacco (supra) and has
issued circular holding that assessee is
entitled to abatement of duty, in the event of
closure of factory for continuous period of
15 days or more, without first depositing the
duty in terms of Rule 10 of PMPM Rules,
2008, the appeal of the revenue has no force
and is hereby dismissed.

26. The question of law are,
therefore, answered in favour of the
assessee and against the revenue.
----------
(2019)12 ILR A797

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.12.2019

BEFORE
THE HON'BLE BISWANATH SOMADDER, J.
THE HON'BLE AJAY BHANOT, J.

Central Excise Appeal No. 89 of 2019 with
Central Excise Appeal No. 88 of 2019

Commissioner, Central Goods & Services
Tax Commissionerate, Ghaziabad
 ...Appellant
Versus
M/S International Tobacco Co. Ltd.
 ...Respondent

Counsel for the Appellant:
Sri Dhananjay Awasthi

Counsel for the Respondent:
Sri Shubham Agrawal, Sri Ajay Agarwal

A. Tax Law - Central Excise Act, 1944:
11A, 11AB, 11AC, 35-G; Central Excise
Rules, 2002: Rules 16(1), 16(2), 26;
CENVAT Credit Rules, 2004: 14, 15(2) -
Scrapping of goods does not fall within
the ambit and scope of Rule 16(1).

B. Interpretation of phrase "or for any
other reason" in Rule 16(1), CER, 2002 -
The phrase has to be necessarily read on the
construction canon of ejusdem generis. The
three preceding phrases („re-made‟, „refined‟
and „re-conditioned‟) depicting three similar
processes qualify and restrict the scope of the
phrase "or for any other reason". (Para 24 to
27)

"Re-made", "refined" and "re-conditioned" are
processes
akin
to
manufacture;
while
scrapping involves destruction of the original
identity of the goods. Scrapping is neither a
species not in the likeness of "re-made",
"refined" or "re-conditioned". Consequently,
when goods are scrapped, it cannot be stated
that the said goods were brought to the
factory for being "re-made", "refined", "reconditioned", "or for any other reason"
provided in Rule 16(1). (Para 31)

CENVAT Credit denied and penalty has been
upheld.

Central Excise Appeal allowed. (E-4)

Precedent followed:

1. Gyanwati Devi Vs. State of U.P. and 5
others, Special Appeal No. 33og 2019 (Para
26)

Present appeal is against order dated
03.04.2018, passed by Customs, Excise
and Service Tax Appellate Tribunal,
Allahabad.

(Delivered by Hon'ble Ajay Bhanot,J.)