2013 (12) TMI 76 - HC - Central Excise

Waiver of the pre-deposit ordered by CESTAT - Pan Masala unit run without registration - Rule 17 (2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 i.e; the deeming clause of the period for operating the machines will be applicable unless evidence to the contrary proves to the satisfaction of the Central excise Officers that the machines were used in the previous financial year as well Held that - The contention that deeming provision will be applicable from 1st April of the financial year in which unit was found to be not registered cannot be accepted there was no prima facie fault in the reasoning given by the Tribunal that the deeming provision will be applicable unless evidence to the contrary is provided to the satisfaction of the Central Excise Officer. Te appellant admitted that the agreement was executed on 1.10.2010 and the manufacture started from January, 2011 for which he also deposited admitted excise duty - The deeming provision as held by the Tribunal prima facie applied with effect from 1st April, 2010 in case of unit, which is not registered and not from 1st April, 2011 -this question is still to be considered by the Tribunal The petitioner has been given substantial relief both in depositing the excise duty as well as the penalty and there is no reason to interfere also there was no substantial question of law arise for consideration Decided against Appellant.

Summary

Issues:
1. Interpretation of Rule 17 (2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.
2. Application for waiver of pre-deposit of central excise duty and penalty under Section 35F of the Central Excise Act.
3. Adjudication of duty liability and penalty imposition for unauthorized operation of a 'Pan Masala' unit without registration.

Interpretation of Rule 17 (2) of the Pan Masala Packing Machines Rules:
The case involved the interpretation of Rule 17 (2) of the Pan Masala Packing Machines Rules, 2008, which states that duty liability arises from the first month of the financial year in which machines were found available unless evidence to the contrary is provided. The Commissioner found that the deeming provision applied from April 2010 due to unauthorized operation of the Pan Masala unit. The Tribunal upheld this interpretation, emphasizing the importance of evidence to counter the deeming provision.

Application for Waiver of Pre-deposit:
The appellant filed an application under Section 35F of the Central Excise Act seeking waiver of pre-deposit of central excise duty and penalty. The Tribunal granted substantial relief by waiving the remaining central excise duty amount after the appellant deposited a portion and directed the appellant to deposit a further amount towards penalty within 12 weeks. The appellant's counsel argued for complete waiver of penalty due to the substantial deposit made and pending adjudication on the deeming provision's applicability date.

Adjudication of Duty Liability and Penalty Imposition:
The Commissioner raised a demand for central excise duty based on unauthorized operation of the Pan Masala unit without registration. The appellant admitted to operating the unit from January 2011 and paid a portion of the duty. The Commissioner imposed penalties on individuals involved under relevant sections of the Act and Rules. The Tribunal dismissed the central excise appeal, extending the time for deposit as requested by the appellant's counsel.

In conclusion, the High Court dismissed the central excise appeal, finding no substantial question of law for consideration. The Court refrained from interfering in the matter, noting the substantial relief already granted to the appellant. The time for deposit was extended, emphasizing compliance by the specified date. The judgment highlights the importance of evidence in countering deeming provisions and the significance of complying with registration and duty payment requirements in excise matters.