2012 (9) TMI 742 - AT - Central Excise

Pre-deposit,penalty, interest under rule Pan Masala Packing Machine - Assessee is a manufacturer of Pan Masala containing tobacco Paying duty u/s 3A CEA, 1944 and Rules thereunder on the basis packing machine - During some period, certain number of machines not been operated for the whole month Certain had been operated only for part of the month, therefore assessee not pay duty for that period AO issue SCN u/s 11 for demand of duty, interest and penalty - Whether in respect of such machines the duty would be payable only on pro-rata basis for the number of days in the month during which the machine had functioned or would be payable for the whole month without giving abatement for the period for which the machine was sealed Assessee file stay application - Held that - As the appellant have not been able to establish prima-facie case in their favour and hence this is not a case for total waiver from the provisions of u/s 35F. On deposit of the duty amount within the stipulated period, the requirement of pre-deposit of interest and penalty shall stand waived and recovery thereof stayed till the disposal of the appeal. Decision in favour of revenue.

Summary

Issues Involved:
1. Liability for duty payment on sealed packing machines.
2. Applicability of Rule 10 of PMPM Rules for abatement.
3. Pro-rata basis duty payment.
4. Application of the judgment in the case of Godwin Steels (P) Ltd. vs. CCE.
5. Consistency in the adjudicating authority's decisions.

Issue-wise Detailed Analysis:

1. Liability for Duty Payment on Sealed Packing Machines:
The Appellant manufactured gutka and was liable to pay duty under Section 3A of the Central Excise Act, 1944, read with the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (PMPM Rules). The Department contended that duty must be paid for each machine that operated at any point during the month, even if sealed for part of the month. The Appellant argued that duty should be on a pro-rata basis for the period machines were operational. The Commissioner confirmed a duty demand of Rs. 1 crore, asserting that the maximum number of machines installed on any day during the month determined the duty liability.

2. Applicability of Rule 10 of PMPM Rules for Abatement:
Rule 10 of PMPM Rules allows for abatement if the entire factory is closed for a continuous period of 15 days or more, with no production or clearance, and prior intimation given to the Central Excise Officer. The Appellant claimed eligibility for abatement as some machines were sealed for 15 days or more. However, the Tribunal held that Rule 10 was inapplicable as the entire factory was not closed, and other machines were operational during the period.

3. Pro-rata Basis Duty Payment:
The Appellant argued that duty should be calculated on a pro-rata basis for machines sealed for part of the month. The Tribunal noted that other than Rule 10, there is no provision in PMPM Rules for pro-rata duty payment. The Tribunal emphasized that under Rule 8, the number of operating packing machines for a month is the maximum number installed on any day during the month, and there is no provision for abatement for machines sealed during the month.

4. Application of the Judgment in the Case of Godwin Steels (P) Ltd. vs. CCE:
The Appellant cited the judgment in Godwin Steels (P) Ltd. vs. CCE, where the Punjab & Haryana High Court held that duty could not be charged for the period before production commenced. The Tribunal distinguished this case, noting that the dispute in Godwin Steels was about duty demand for the period before production started, whereas the current case involved machines sealed for part of the month.

5. Consistency in the Adjudicating Authority's Decisions:
The Appellant argued that the same Commissioner had previously accepted pro-rata duty payment in a similar case involving M/s Rajat Industries Pvt. Ltd. The Tribunal rejected this argument, stating that one wrong decision cannot justify another wrong decision.

Conclusion:
The Tribunal concluded that the Appellant had not established a prima-facie case for total waiver of pre-deposit. The Appellant was directed to deposit the entire duty demand of Rs. 1 crore within eight weeks. Upon deposit, the requirement of pre-deposit of interest and penalty was waived, and recovery stayed till the disposal of the appeal. Compliance was to be reported on 13.7.2012, and the appeal would be listed in due course.