2013 (3) TMI 344 - AT - Central Excise

Whether gutka manufacturing machines were properly sealed in accordance with the Rules? - allegation on assessee for sale during the period of closure - as per Joint CDR that as per the Rules, every machine has to be sealed separately and which was not done - Held that - No such invoices have been placed on record to know about the issue of invoices regarding sale of gutka by the assessee during the period of closure. Further there is no evidence to show that during the period of closure Gutka was cleared as could to anyone. Thus on perusal of the Panchnama, it is found that the excise officials unplugged the machines to make them un-operative and thereafter entrance door of the hall in which those machines were located were locked to prevent ingress and the lock was properly sealed. Not only this, the entrance hall of the factory was also locked and sealed. From this, prima facie, it appears that the officials of central excise department ensured that the machines, in question, could not be used during the period in question. Shri D. Singh, . As on prima facie reading of the Pan Masala Packing Machines Rules obligation of the assessee is to inform the department of his intention not to use the packing machines for a period more than 15 days. The sealing is to done by the departmental officials and it is for them to ensure proper sealing of machines in accordance with the Rules. If the departmental officials have not followed the rules, the assessee cannot be penalized for the same. Moreover, it is not the case of the Revenue that excise officials who went for sealing of the machines colluded with the assessee. Thus the appellant has been able to make out a prima facie case for waiver of pre-deposit.

Summary

Issues:
1. Refund of excess excise duty for a period of factory closure.
2. Alleged issuance of sales invoices during the factory closure period.
3. Compliance with rules regarding sealing of Gutka manufacturing machines.

Analysis:
1. The appellant, a Gutka manufacturer, closed the factory for 15 days and intimated the Excise Department. The Asstt. Commissioner sanctioned a refund of excess excise duty for this period. However, a subsequent inquiry revealed sales invoices issued during the closure period, leading to a show cause notice for duty demand, interest, and penalty. The Commissioner confirmed the duty demand, prompting the appellant to appeal to the Tribunal seeking waiver of pre-deposit.

2. The appellant argued that the machines were sealed properly during closure as per the Rules, emphasizing the seals found intact during desealing. The appellant contended that the sealing was in compliance with Rule 10 of the Pan Masala Packing Machine Rules, 2008. In contrast, the Department argued that mere unplugging and sealing in a hall did not meet the Rule requirements.

3. The Tribunal examined the Panchnama and found that the machines were made inoperative, sealed in a hall, and the entrance gates were locked and sealed. The Tribunal noted that the officials ensured the machines could not be used during closure. It was highlighted that the onus of proper sealing lay with the Excise officials, not the appellant. The Tribunal concluded that the appellant had a prima facie case for waiver of pre-deposit, dispensed with the pre-deposit condition, and required a bond for the disputed amount if the appeal was decided against the appellant.

This judgment clarifies the importance of adhering to excise duty rules, particularly regarding the proper sealing of manufacturing machines during closure periods. It underscores the responsibility of Excise officials in ensuring compliance and the need for evidence to support duty demands.