CX - Compounded levy - In view of fact that Department had after surrender of registration on 29.05.2015, sealed machinery & allowed re-registration w.e.f. 01.06.2015 without any murmur, duty is to be paid on pro rata basis only: CESTAT
By TIOL News Service
NEW DELHI, SEPT 01, 2018: THE appellant is engaged in manufacture of chewing tobacco and was paying duty on goods manufactured in terms of Compound Levy Scheme. They filed an application proposing to surrender the registration and permanently ceasing of work in respect of all the machines installed in their factory premises.
Pursuant to this intimation, all machines were sealed on 29.05.2015. The appellant entered into a revised lease agreement with the landlord of same premises where they were operating and applied for fresh registration w.e.f. 01.06.2015 for manufacture of the same products. The machines which were sealed on 29.05.2015 were desealed on 05.06.2015 and on this date, the appellant commenced manufacture of the chewing tobacco.
As per the terms of Compound Levy Scheme, the appellant had paid in lumpsum and in advance the duty payable for the machines installed and working in the factory for the full month of June, 2015.
The dispute pertains to the refund claimed by the appellant for the period 1st to 4th June, 2015. For the said period, claim of appellant is that none of the machines were working since they remained sealed.
The Department rejected the refund claim by taking the view that the surrender of registration on 29.05.2015 and taking fresh registration w.e.f. 01.06.2015 cannot be considered as permanent discontinuation of the manufacture of goods and recommencement on 05.06.2015 by a new manufacturer.
Aggrieved by rejection of refund claim, appellant is before the Tribunal.
Appellant submits that it is not in dispute that all the machines were duly sealed by departmental officers on 29.05.2015 and remained sealed till they were reopened for manufacture on 05.06.2015. Hence he argued that in terms of Rule 9 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines, Rules 2010, they are required to pay duty only on pro rata basis for the total number of days in the month and the number of days remaining starting from the date of such commencement. They rely on the decision in M/s Dhariwal Industries Ltd. - 2015-TIOL-1818-CESTAT-AHM where a similar issue stands decided in favour of the assessee.
On the other hand, the AR submitted that the closing of manufacturing activity w.e.f. 29.05.2015 and the claim of recommencement w.e.f. 05/06/2015 are to be viewed only as an attempt to avoid payment of duty and wrongly claiming abatement; that the action of the appellant for surrender of the registration and taking fresh registration is an attempted modus operandi to garner refund in a legitimate way.
The Tribunal observed that -
++ The registration certificate was surrendered w.e.f 29.05.2015 as per the intimation given to the Department. But the appellant obtained fresh registration w.e.f. 01.06.2015. It is to be noted that there has been no change in the name of the appellant, or in their constitution. The only apparent reason cited is entering into a new lease agreement with the landlord. But the premises where the factory continued operation w.e.f. 01.06.2015 remains the same. It is also not in dispute that between the period 29.05.2015 upto 04.06.2015, all the machines remained sealed within the factory premises.
++ The decision in case of M/s Dhariwal Industries Ltd. 2015-TIOL-1818-CESTAT-AHM will be applicable to the facts of the present case. The appellant will be entitled to the refund for the period 1 st to 4 th June in view of the fact that the Department had after surrender of registration on 29.05.2015, allowed registration w.e.f. 01.06.2015 without any objection or murmur.
The appeal is allowed with consequential relief.
(See 2018-TIOL-2690-CESTAT-DEL)
