ORDER
K.D. Mankar, Member (T)
1. The dispute in this case relates to interpretation of the provisions of Rule 96 ZQ (7) (f) of the Central Excise Rules, 1944 relating to payment of duty under the compounded levy scheme. The appellants claimed abatement on account of closure of their mill from 01/07/99 to 02/08/99 and from 02/08/99 to 30/11/99. The Commissioner (Appeals) held that, the appellants were required to make the payment in respect of a part period of closure of the mill exceeding the closure beyond a calendar month. In order to understand the objection each stenter wise period of closure is tabulated as below:-
S.No.
Stenter No.
Period of closure
i)
No.FS-400
16/12/98 to 30/11/99
if)
No.84475
01/07/99 to 02/08/99
iii)
No.85527
02/08/99 to 30/11/99
2. Relevant provision of the Rule 96ZQ (7) (f) is re-produced hereunder:-
“where the claim for abatement by the independent processor is for a period of one month or more, he shall not be required to pay the duty for that period in advance”
3. In interpreting the aforesaid provisions, the Commissioner took the view that the abatement has to be considered for a block period of one month. For eg. while considering the abatement for the period 01/07/99 to 02/08/99, it is held that, the appellant is entitled for abatement for the period of 31 days of July 99. Thereafter, the closure of the stenter being only for two days i.e. 01/08/99 and 02/08/99, while the abatement for the complete month of July 99 has been permitted, the closure for the month of August 99 being less than seven days, the appellants were asked to make payment for the entire month. Similarly, for the stenter No. 85527, the closure period is 02/08/99 to 30/11/99. In the findings, it has been held that since the closure in the month of August 99 was not for one month, the appellants are required to pay duty for the entire month of August 99 and then claim the abatement on pro rata basis for the number of days of closure. The claim for abatement was accordingly rejected.
4. The grievance of the appellant is in respect of rejection of claim of abatement for one day in respect of stenter No. 84475, which was closed for the period 01/07/99 to 02/08/99. It has been held that, as per Clause (f) of Sub Rule (7) of Rule 96ZQ, appellants were eligible for abatement of duty for 31 days of July 99. However, as the stenter was opened on 02/08/99, the appellant were required to pay duty for the entire month of August 99 and then directed to seek abatement for the period 01/08/00 to 02/08/00. Hence the claim for abatement was rejected.
5. Similarly, the claim in respect of stenter No. 85527 for the period from 02/08/99 to 31/08/99 was disallowed on the ground that though the abatement has been claimed for more than seven days but less than a month, the appellants were required to pay duty for the moth of August 99 by virtue of Clause (e) of 96ZQ and then claim abatement for the days of closure and consequently the claim for abatement for the month of August 99 was rejected.
6. The appellants are challenging the interpretation adopted by the Commissioner. It has been pleaded by them that, the phrase “period of one month” in the condition (f) of Rule 96ZQ (7) is erroneously interpreted to mean a “calendar month”. The rules themselves do not specify any such explanation. Accordingly, it is pleaded by the appellants that “period of one month or more” has to be understood as continuous period of one month or more and if the said period is spread over two consecutive calendar months, then the duty liability for each of the calendar month has to be abated separately. In other words, according to the commissioner the broken period which spills over the succeeding month has to be reckoned as a separate period of abatement and not in continuation of the period of closure exceeding one month.
7. Heard both sides.
8. It is revealed that interpretation adopted by the Commissioner lacks legal basis. The period of closure of a month and more, will not obviously synchronise with the calendar month. If that was the express intention of the Rule, it should have been explained by insertion of suitable explanation thereunder. In the absence of such an explanation, the period of abatement of “one month or more” has to be construed to be a continuous period of one month or more. In case the interpretation adopted by the lower authorities is held as acceptable, it would mean that unless the closure period synchronises with the exact calendar month, no one can take advantage of the legal provision of abatement for a period of one month or more. I note that on reading the condition (f) as reproduced earlier, no such interpretation seems to be flowing therefrom. This view is also supported by the decision of the Tribunal in the case of Janki Processors Ltd. v. CCE, Jaipur reported in 2003 (156) ELT 68 (Tri.Del.). Consequently, I hold that the approach adopted by the Commissioner is without any legal basis and therefore impugned order cannot be sustained. Accordingly, I allow the appeal and set aside the impugned order.
(Operative part pronounced in Court)