2013 (9) TMI 771 - HC - Central Excise

Exemption on Duty under Rule 10 of Pan Masala Rules - The assessee claimed for exemption from payment of duty for the period the machine remained sealed i.e. 22-23 days, in terms of Rule 10 of Pan Masala Rules, 2008 but the same was denied Whether the assessee was entitled for the exemption of the duty calculated for a period when the Machine was sealed by the department or not - Held that - It was undisputed fact that the Machines were sealed and again it were unsealed and in each case, the sealing period was more than 15 days - There was nothing stated in Rule-10 to the effect that a continuous period falling under different calendar months should be split into period falling under each month and abatement determined separately - So long as the days of closure were continuous, even if the days fall in different calendar months it will constitute one continuous period and the abatement under Rule 10 was to be determined accordingly there was no reason to interfere with the orders passed by the Tribunal Decided against Revenue.

Summary

Issues:
- Appeal filed by the department under Section 35-G of the Central Excise Act, 1944 against Orders of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi.
- Dispute regarding entitlement for duty exemption during the period when the Machine was sealed by the department.

Analysis:
The judgment by the Hon'ble High Court of Allahabad pertains to two appeals filed by the department challenging the Orders of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The respondent, a company engaged in manufacturing and selling 'Gutka', had a Pouch Packing Machine for sealing Pan Masala, with excise duty payable on a month-to-month basis. The company requested unsealing of the machine which was sealed by the department for a period of 22-23 days. The company claimed exemption from duty for the sealed period under Rule 10 of Pan Masala Rules, 2008, which was denied initially, leading to appeals before the Tribunal. The Tribunal allowed the company's claim, prompting the department to file the present appeals before the High Court.

The crux of the dispute revolved around the interpretation of Rule 10 of Pan Masala Packing Machines Rules, 2008, which provides for abatement from duty liability if the factory does not produce goods for a continuous period of 15 days or more. The rule specifies procedures for sealing and unsealing packing machines during non-production periods. The High Court noted that the machines were sealed for more than 15 days continuously, and there was no provision in Rule 10 to split such periods into separate months for abatement calculation. The court emphasized that continuous closure days, even if spanning different calendar months, should be considered as one continuous period for abatement determination.

After considering the arguments of both parties and examining the record, the High Court upheld the Tribunal's decision, finding no grounds to interfere. The judgment affirmed the reasoning provided by the Tribunal in allowing the company's claim for duty exemption during the sealed period. Consequently, the High Court dismissed both appeals filed by the department, thereby affirming the Tribunal's orders in favor of the respondent company.