2013 (5) TMI 596 - AT - Central Excise

Condition for availing Abatement of duty - Under Rule 10 of the Pan Masala Packing Rules Held that - In terms of the provisions of Rule 10 of the Pan Masala Packing Rules, for claiming abatement one condition is that the intimation regarding the closure of the factory has to be given at least three days in advance and other condition is that the period of abatement shall not be less than 15 days and that during the period of closure there will be no manufacturing whatsoever of the specified goods whatsoever and no removal of the goods. In this case, there is no dispute that the period of abatement is more than the specified limit and the intimation regarding closure of the factory had been given at least three days in advance. On first occasion, the appellant had intimated on 25/3/09 that they would be closing the factory from 4th April 2009 and on second occasion on 23/6/09 the appellant had intimated they would be closing the factory from 3rd July 2009. There is also no dispute the machine was sealed on 4th April 2009 and 3rd July 2009. Just because the Superintendent s remark regarding sealing does not mention the time of sealing, it cannot be presumed that on 4th April 2009 and 3rd July 2009, the factory had operated. The same view had been taken by the Tribunal in the case of CCE, Indore vs. Sai Pan Products 2012 (12) TMI 380 - CESTAT, NEW DELHI Thus, the impugned order denying the abatement of duty is not sustainable.

Summary

Issues:
1. Determination of Central Excise duty based on sealing of manufacturing machine.
2. Interpretation of Rule 10 of Pan Masala Packing Rules regarding abatement of duty.
3. Compliance with the requirement of giving advance intimation for factory closure.

Analysis:
1. The judgment revolves around the determination of Central Excise duty concerning the sealing of a manufacturing machine used for producing pan masala containing tobacco. The dispute arose during the months of April and July 2009 when the factory was operating under the Pan Masala Packing Rules. The appellant had informed the Central Excise authorities in advance about the intended closure of the factory and requested the sealing of the machine. However, the sealing officer did not mention the time of sealing, leading to a dispute over whether duty should be charged for the days the machine was sealed. The Assistant Commissioner charged duty based on the sealing dates, which was upheld by the Commissioner (Appeals) and challenged in this appeal.

2. The interpretation of Rule 10 of the Pan Masala Packing Rules is crucial in this case. The rule requires that for claiming abatement, the factory closure must be intimated in advance to the Jurisdictional Deputy Commissioner/Assistant Commissioner and the Superintendent. The machine should be sealed to prevent operation, and there should be no manufacturing or removal of goods during the closure period. In this case, the appellant complied with the requirement by giving advance intimation of factory closure at least three days before the specified dates. Despite the lack of mention of sealing time by the Superintendent, it cannot be assumed that the factory operated on those days. The Tribunal's precedent in a similar case supported this interpretation, emphasizing that sealing does not automatically imply operation.

3. The issue of compliance with the advance intimation requirement for factory closure is central to the dispute. The appellant argued that the failure to mention the sealing time should not lead to the presumption of factory operation on the sealed days. The appellant relied on previous judgments that emphasized the importance of intimation of closure to the authorities as sufficient compliance with the rules. The Departmental Representative contended that duty should be charged for the days the machine was sealed, assuming prior operation. However, the Tribunal found in favor of the appellant, ruling that the lack of sealing time mention does not justify charging duty for those days. The judgment set aside the impugned order and allowed the appeal with consequential relief, highlighting the significance of compliance with Rule 10 provisions and the need for clear evidence of factory operation.

This detailed analysis of the judgment provides insights into the legal reasoning behind the decision and the application of relevant rules and precedents in resolving the issues raised in the case.