2015 (11) TMI 702 - AT - Central Excise

Duty demand - manufacturer of pan masala / gutkha and paying duty under Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008 - Held that - A similar case came up before this tribunal in the case of Godfrey Philips India Ltd. 2015 (8) TMI 35 - CESTAT NEW DELHI wherein the factory of the assesse was not in operation during the period 01.06.2010 and 21.06.2012 and it was operative only for three days i.e. on 27th 28th and 29th June 2012. But the assesse paid the duty for four days and the claim of the assessee was of abetment of excess duty paid for 30.06.2012 - In this case also the factory of the respondent was closed from 01.05.2011 to 16.05.2011. On 01.05.2011 the respondent was not sure whether their factory will be function from 17.05.2011 or not. Therefore respondent was not required to pay duty on 05.05.2011 but when the respondent s factory became operational on 17.05.2011. Within five days thereof the respondent has paid duty for the period 17.05.2011 to 31.05.2011. Therefore I hold that respondent have correctly paid the duty on pro rata basis and do not find any infirmity with the impugned order. Same is upheld. - Decided against Revenue.

Summary

Issues:
Interpretation of duty payment rules under Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008, entitlement to abatement of duty during machine closure period, requirement to pay duty in advance or on a pro-rata basis.

Analysis:
The case involved an appeal by the Revenue against the order of the Ld. Commissioner (A) regarding duty payment by the respondent, a manufacturer of pan masala/gutkha, under the Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008. The respondent's machines were sealed from 01.05.2011 to 16.05.2011, and production resumed on 17.05.2011, with duty paid on a pro-rata basis for that period. The Revenue contended that the duty should have been paid in advance for the entire month, citing stricter rules due to past duty pilferage by manufacturers. The Revenue argued that the Ld. Commissioner misinterpreted the rules by allowing pro-rata payment and claimed a harmonious reading of rules 7, 9, and 10 to determine duty payment methods.

A key point of reference was a similar case involving Godfrey Philips India Ltd., where the issue of duty payment on a pro-rata basis after machine closure arose. The tribunal in that case clarified that duty should be paid only for the operational days, not for the whole month, and interest could be charged for delayed payment. Another case, Shree Flavours Pvt. Ltd., highlighted the importance of timely duty deposit and seeking abatement if a factory closure was known in advance. The tribunal's decision in these cases supported the appellant's entitlement to abatement during closure periods.

The tribunal in the present case found that the respondent correctly paid duty on a pro-rata basis after the factory closure, as they were unsure of the operational status before 17.05.2011. The respondent paid duty within five days of resuming operations, aligning with the duty payment rules. The tribunal upheld the Ld. Commissioner's order, emphasizing the correctness of the pro-rata duty payment and dismissing the Revenue's appeal. The decision was based on the interpretation of duty payment rules and the entitlement to abatement during machine closure periods, ensuring compliance with the relevant legal provisions and precedents.

In conclusion, the tribunal's detailed analysis of the duty payment rules under the Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules 2008, along with the application of precedents supporting duty payment on a pro-rata basis during machine closure periods, resulted in the dismissal of the Revenue's appeal. The judgment emphasized the importance of aligning duty payment practices with the specific circumstances of machine operations and closures, ensuring fair and compliant revenue collection processes in line with established legal principles and interpretations.