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2015 (9) TMI 1557 - AT - Central ExciseValuation - pan masala - closure of factory - case of Revenue is that the appellant were required to pay duty on 5th day of the month if at all, the machines being closed for more than 15 days - Held that - the appellant is not required to first pay duty for whole of the month and then make claim of abatement. The appellant is required to pay duty for the days for which the machines were operating and only interest for the period from due date to the day on which the adjusted duty chargeable was paid would be leviable. Liability of interest - Held that - Reliance was placed in the case of Steel Industries of Hindustan 2013 (10) TMI 172 - ALLAHABAD HIGH COURT , wherein the Hon ble High Court held that claiming the abatement for closure period depositing the duty for the whole month was not a pre-condition under Rule 96ZB of the CER, 1944 - the appellant has paid duty correctly but they are liable to pay interest for the period from the due date to the date they adjusted duty chargeable was paid. Penalty - Held that - penalties are set aside. Appeal allowed - decided partly in favor of appellant-assessee.
Issues:
- Demand of duty and penalty on the appellant for contravening provisions of Pan Masala Packing Machines Rules, 2008. - Interpretation of Rules 7 and 10 of the PMPM Rules, 2008 regarding duty payment and abatement claim. - Applicability of interest on adjusted duty chargeable. - Imposition of penalties on the appellants. Analysis: 1. The judgment dealt with the appeal against an order demanding duty of Rs. 3,93,44,000 from the appellant, a Pan Masala manufacturer, for contravening the Pan Masala Packing Machines Rules, 2008, and imposing a penalty of Rs. 20,00,000 on one of the applicants. 2. The appellant contended that as per Rule 10 of the PMPM Rules, 2008, duty on a proportionate basis should be levied if the factory did not produce notified goods for 15 days or more, provided an intimation is filed. The appellant had intimated in advance about non-operation for more than 15 days during the impugned period. They argued that duty payment was not required when machines were sealed on the 5th day of the month, entitling them to pay duty on a pro-rata basis. 3. The appellant cited precedents like Shakti Fragrances Pvt. Ltd. and Shri Flavours Pvt. Ltd. cases to support their contention that they were entitled to pay duty on a pro-rata basis as per Rule 10. 4. The respondent argued that duty should be paid on the 5th day of the month if machines were closed for more than 15 days, with a rebate claim possible for such closed periods. They contended that duty payment was mandatory before any claim of abatement under Rule 10. 5. The Tribunal noted the closure of machines for over 15 days and that they were not operational on the 5th day of the month. Relying on the Kays Fragrance Pvt. Ltd. case, the Tribunal held that duty should only be paid for operational days, with interest applicable from the due date to the payment date of adjusted duty chargeable. 6. The Tribunal referenced past judgments to support its decision, emphasizing that claiming abatement for closure periods without depositing duty for the whole month was not a precondition. Consequently, the appellant was deemed to have paid duty correctly but was liable for interest. Penalties imposed on the appellants were set aside, and the appeals were disposed of accordingly.
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