By TIOL News Service

AHMEDABAD, NOV 05, 2015: THE assessee is engaged in manufacture of Pan Masala and Pan Masala containing tobacco. The goods are assessed under compounded levy scheme. As per the scheme, the assessee has to pay the duty based on the capacity of production at the beginning of the month. As per Rule 10 of the Pan Masala Packing Machines (Capacity Determination And Collection Of Duty) Rules, 2008, if the factory did not produce the notified goods for a continuous period of 15 days or more, proportionate duty shall be abated.

During the month of March 2011, the assessee did not produce the goods for 16 days and followed the procedure of getting the packing machines sealed by the Central Excise officers. While paying the duty for the month of April 2011, the assessee claimed the abatement for non-working period in the month of March and paid the net duty. Department demanded the abated duty on the ground that the assessee cannot suo motu adjust the abatement and ought to have claimed refund. However, the Tribunal allowed the appeal by the assessee. Aggrieved, revenue is now in appeal before the High Court.

After hearing both sides, the High Court held:

+ 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.

+ 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, 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 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.

(See 2015-TIOL-2546-HC-AHM-CX)